The trust was set up to take effect when my husband died in 2007. The property I live in is the only asset. The Trustees are my two stepsons, my daughter, myself and our Solicitor. My daughter and her husband live in part of the house as I do myself and it couldn't be sold unless I could pass her share of the Trust to her and at the same time the two boys would receive theirs, but if these amounts (maybe £100,000 each) attract tax then it can't be done. Hence my question can I pass this on before I die without taxation? I suspect not.
Thank you for your info. I don't want to renounce my life interest in favour of the beneficiaries, I would like to be able to sell the house, buy another and pass them the money from the trust (which is £265,000 which was the amount allowed in 2007) The remainder of the money would buy me another house and I would leave that to them on my death.
There would be no point in doing this if the £265,000 was taxed and to add to the complication one of the boys lives in Canada and the other in France. Then there is my daughter who cannot afford to buy a house so would need the finance for that, which is why I thought £100,000 each if the house fetched enough. This would be more than the amount mentioned in the Trust so I imagine this adds to the complication?
Mike is in a bad way in Canada and it would be good if I could help his finances in some way. Can't do for one and not the others.
As the trust was set up by your late husband's will, the value transferred into the trust won't have eaten into his nil-rate IHT band as you are the life tenant and transfers between spouses on death as well as in life are IHT exempt. See paragraph 12.9 here.There can be no CGT on the house sale as it is your main home, albeit that it is owned by a trust. As far as I can see, you will be renouncing part of your life interest by making a potentially exempt transfer to your children. They won't become life tenants of the trust themselves. There can only be exit IHT charges on money leaving the trust if the nature of the trust changes (the children become life tenants) which it is not doing. All it is doing is downsizing and you are making a gift which may be charged to IHT if you die within seven years of making it. See page 39 here.I cannot help with the Canadian and French tax positions I'm afraid.