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Aim to eradicate needless expense and litigation
A consultation on a proposed bill to reform aspects of the law on the classification and apportionment of income and capital in trusts has been published by the Ministry of Justice.
The proposed reforms, which were recommended in the Law Commission report Capital and Income in Trusts: Capital and Apportionment, aim to simplify and modernise trust law rules that create needless expense, litigation and difficulty for trustees of private and charitable trusts.
They will also reduce the regulatory burden on the Charity Commission, and facilitate total return investment by charities.
The recommendations are as follow:
- amend the law for classification of corporate receipts from tax-exempt demergers to ensure that they are classified as capital rather than income (with a corresponding power for trustees to make payments to income beneficiaries),
- disapply the statutory and equitable apportionment rules, for trusts coming into existence after the Bill comes into force; and
- allow charitable trusts with permanent endowments to adopt a total return investment policy by means of a resolution.
For full details see here. Responses should be sent by 14 June via email.
