DGT Surrender
lauroyle
Member
Hi,
We have a client who wants to surrender their 6-year old Discretionary Discounted Gift Trust because they don't need the income and they want to gift the capital to beneficiaries now. Both we and our technical team are a little uncertain on how to proceed! Paraplanning leaning towards the outcome being that all discount benefit is lost but Technical think someone ought to do a calculation of income as yet unpaid to assess impact on IHT (possibly accountant's job).
Anyone done this before, any thoughts?
Thanks
Laura
Comments
Hi,
Q7
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/discounted-gift-trust-qa/
It's never straightforward to end a DGT during the settlor's lifetime.
If it was only set up six years ago I'd be looking at the suitability of the original advice, specifically as to why they felt this level of income was required for the lifetime of the settlor.
Thanks @benjaminfabi
I think there needs to be some legal advice sought here. I understand it is possible to get out of the trust but the route to doing so will depend on the type of trust used and the trustee powers as far as I know.
It's not uncommon for an adviser to plant the seed of this as an option for a client and then subsequently recommend it when the client thinks it is a good idea. The issue is that advisers can sometimes make things more complicated than they should be because it suits their AUM and it keeps the client happy but then problems can occur when he reality hits and the client doesn't need the income
Thanks @sm2000p , am inclined to agree. Referred to compliance team for now!