What to do when a trust is wound up

11th September 2023

Advising you through the Probate process

The deed drafted could state that at X date the trust will be wound up and the capital held distributed to A and B. This point does not need to be in the deed but would be advantageous to give the trustees the power to consider this if the time was right and the beneficiaries could be trusted to maintain the assets correctly.

If the trust was wound up and the assets distributed, then you would need to consider exit charges as this would be treated as an exit from the trust. Therefore, depending on the values involved, IHT could be payable at a maximum rate of 6% on the value of the assets distributed. Capital gains tax also needs to be considered but the trustees and beneficiaries could make a joint claim to holdover the gain for when the beneficiaries sell the asset. This means no CGT would be payable by the trustees when the trust is wound up.

The Trust register would also then need to be updated with the fact the trust has now ceased.

Dealing with the legal and administrative affairs of someone when they pass away can feel like a minefield. It can be difficult to know who to turn to and you may feel overwhelmed with the responsibility which has now fallen on your shoulders.

We understand how emotional and challenging this time can be and we are here to help navigate you through this ever-changing process.

At Thompson Jenner, our team can guide you through all aspects of trusts so that you can create a plan for protecting your assets for generations to come. So, get in touch today and let us help make the process smooth, straightforward, and worry-free.

Other articles in this series:

Income Tax implications: The two main types of trusts

What do I need to consider to set up a trust?

What are the two main types of trusts?

Inheritance tax implications for a relevant property trust