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bigduckontax, Accountant
Category: Tax
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I have a Discretionary trust tax question. My client was

Customer Question

Hi, I have a Discretionary trust tax question. My client was made trustee of a discretionary trust in October 2013. The asset transferred into the trust was her Mothers house. This was under the IHT threshold (£250,000) so no IHT was payable by the trust. My client's Mother has since died and the house has been sold for £230,000, so no CGT payable by the trust. What are the tax implications for the beneficiaries, ie if my client wants to use the money to pay her own mortgage off.
Thanks in advance.
Jo
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Jo, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Beneficiaries receive bequests free of any tax. The estate cannot be distributed until the matter of IHT is settled, although in this case none is due. Your client may use her inheritance as she wishes. I do hope that my reply has been of assistance.
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Customer: replied 1 year ago.
Thanks Keith, that is what I expected. So the trust no longer exists? That is what my client had been told but she had a nagging feeling that it would come back to bite her.Thanks for your help.Kind regardsJo
Expert:  bigduckontax replied 1 year ago.
Assuming that the Trust was to protect her Mother's house the sale of the house by the Trustees would effectively extinguish the Trust.
I do not think that your client need be concerned. The Trust has distributed its assets.
Thank you for your support.

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