Mother’s trust

A mother has just set up a bare trust for her daughter who was born in 1995. A trust deed has been drawn up along with a deed of gift/declaration of trust by which 55% of the beneficial ownership of a freehold property worth about £300 000 was transferred into the trust. The only other trust asset is £10 cash.

A bank account is being opened by the trustees who will receive about £900 rental income per month while the house is occupied by the mother who is the legal owner of the property and the donor of the 55% interest to avoid any possibility of a reservation of benefit argument for inheritance tax.

The disposition should be covered by statutory reliefs but the family wish to make the rental payments in any event to avoid the point being raised.

The mother has a terminal illness. Following...