A & M uncertainty

An accumulation and maintenance trust was set up 20 years ago. The beneficiaries become entitled to the income and capital at 25 and none has yet reached that age. The income to date has been accumulated.

Next year the 21-year accumulation period will be reached and I am unsure of the implications. Must the annual income then be distributed? If so do the trustees have discretion about to whom they make payments? Do the beneficiaries receive the income net of tax at 40%? Will the trustees still be liable for income tax at the rate applicable to trusts?

Query T17 115 – AMT.

Reply by Lacuna:

As always reference to the settlement deed would be necessary in order to be able to give definitive answers. One issue to consider is the application of Trustee Act 1925 s 31 that could result...