TRUST CAPITAL OR TRUST INCOME?
NOVEMBER 10TH 2010 | 10:19 TAGS:
Trustees must always distinguish between what is capital and what is income in the management of their trusts since different classes of beneficiaries may benefit from capital compared with income and different taxes apply.
Defining what is capital and what is income sometimes produces a lack of fairness between those beneficiaries who are entitled to the capital and those who are entitled to income. As a consequence the law intervenes and suggests apportionments. The Law Commission was asked to consider some practical difficulties as a result of concerns expressed during the passage of the Trustee Act 2000 through Parliament.
The recent case of Trustees of Bessie Taube Discretionary Settlement Trust & others v HMRC [2010] UK FTT 473 has also had to grapple with this issue.
To continue reading this item, you need to subscribe. Click here to find out about the benefits of a subscription to LawSkills
