A testamentary trust occurs where a Will establishes a trust in which one or more assets of the deceased must be held on trust for the benefit of one or more beneficiaries.
CGT roll-over relief (which allows the taxpayer to delay paying CGT) will not apply unless the asset passes to the beneficiary in accordance with the terms of the will. Hence, if a life tenant and the remainderman agree to end a life interest trust prematurely any later transfer of assets by the trustee to the life tenant and/or remainderman will not be done in accordance with the terms of the will and no roll-over will apply.
If the life tenant trust ends prematurely AFTER the deceased estate has reached full administration, then double taxation could arise. This is because the remainder man is taxable on the surrender of their interest and the trustee is taxable when the life tenant becomes absolutely entitled to the assets as against the trustee.
Should you have any more enquiries in relation to the above or otherwise, get advice first from our Lawyers and Tax Lawyers at The Quinn Group. Call us today on 02 9223 9166 or submit an online enquiry.