Cash gifts / Probate / Trust

[Karlos77]

Hello,

If a sibling had gifted themselves £20k cash from a bank account that's in a family trust (using LPA for the donor while the donor was alive) and within 7 years of the donors death then I understand that the any cash beyond £3k per year is considered part of the estate for IHT, but is the gift considered part of the estate when it comes to the distribution between beneficiaries? ie. if there were two beneficiaries and one had cash gifted themselves £20k from the account in the trust, would that be deducted from their share of the distribution of the trust or not?

Thanks!

[atticus]

Provisional view:

The question appears to be whether this sibling was right to help him/herself to £20,000 from the deceased's account.

If the money was not in the account at the time the deceased died, then it is not in the estate for distribution. The question appears to be whether it should be repaid..

The terms of the trust may be relevant.

[Sam101]

If the family Trust was being held for the beneficiaries after the death of someone with a lifetime interest, then the trustee gifting themselves money is not allowed unless there were special circumstances that the life interest agreed to.

Gifting from a Trust may bring taxation into account, but without further clarification it is impossible to answer your question.

Can you clarify the position relating to the Trust fund, the interest it is or was for and the trustees so that further comment may be made?

[Karlos77]

Thanks for the quick replies already.
The lifetime trust was setup by my father with himself and my sister as trustees for the purpose of looking after our mother after his death since she has mental health issues that render her unable to manage finances / property. In his will everything was left in equal share to my sister and I and nothing to our mum. Their house and his bank account are in the trust which specifies my sister and I as equal beneficiaries. My father died, and then my mother not long after. It's been two years and my sister has not distributed anything from the trust yet, and been uncooperative with the two legal firms that have been involved so far. I know that she's gifted herself a large amount of cash from my dads account during the last few years of his life and I suspect that the reason that she has been uncooperative is that she's trying to hide these gifts. Does that help or is there any more that would be useful to know?

"If the family Trust was being held for the beneficiaries after the death of someone with a lifetime interest, then the trustee gifting themselves money is not allowed unless there were special circumstances that the life interest agreed to."
I guess that means that she was not supposed to gift herself unless she had some kind of written approval from my father? and I'd need to raise some kind of legal challenge if I wasn't happy with it.

[Sam101]

It sounds as if you may be right. You need to seek help and find a solicitor to take this up, as she seems to be acting wrongly. As a a trustee she has a legal responsibility to administer the Trust in accordance with Will of your Father. Can you contact the solicitors who dealt with his Will and see if they can help. You could also contact the Probate Court and explain the position to them.

Let us know how you get on please.