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Vulnerable tax

04 August 2009
Issue: 4217 / Categories: Forum & Feedback , Inheritance Tax
Income has been accumulated for the beneficiary of a statutory trust who is a minor. Is there any way of recovering or obtaining the benefit of the tax paid by the trust on its income?

Following the unfortunate death of a young unmarried mother a statutory trust arose on intestacy.

Since then the income of say £7 000 less tax has been accumulating annually. The child lives with her father (who is the legal guardian).

However as the father would not respond to any correspondence a vulnerable trust election was not made. With the father’s past record it was thought that he was likely to squander the inheritance and so distributions have not been made to date.

The trust must end next year as the child will be 18. If payments cannot legally be made to her before that time the tax paid by the trust over the years will not be recovered by the child and if distributions are made for her maintenance those funds may be wasted.

As there is a current and accumulated tax...

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