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Trusts for vulnerable beneficiaries

Sean_FernyhoughSean_Fernyhough Member
in Technical stuff

Existing trust taken over recently. The trust property is from an award by the Criminal Injuries Compensation Authority and is placed in two offshore bonds.

I'm rusty on these specific arrangements. I'm concerned with planning properly for a fairly large withdrawal from the trust sometime in the coming months.

The trust is written as a discretionary trust - I'm assuming to protect the capital from the DWP. It's clear that the beneficiary is vulnerable. The trustees also tell us that they have not made an election.

In this situation is the CICA - in effect - the settlor? The declaration of trust is made by the beneficiary's mother and her partner. However, the document doesn't refer to them as settlors but as "The Original Trustees".

Does this mean withdrawals and surrenders from the offshore bonds are either taxed at RAT or at the beneficiary's rate if initially assigned out of the trust?

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