Resettlement of trusts

The resettlement of trusts is a complex legal area involving the termination of an existing trust and the creation of a new trust over the same or altered property. This guidance note provides comprehensive coverage of the key concepts, legal principles, and significant revenue consequences associated with trust resettlements. Practitioners must understand the nuances of intentional and deemed resettlements, the impact of trust deed amendments, and how recent case law shapes the application of these principles.

Topics Covered

• What is a settlement?
• What is a resettlement?
• When do changes in trust terms amount to a deemed resettlement?
• Summary of revenue consequences of resettlement

Essential Insights

• Assess whether your trust deed expressly authorises resettlement and outlines required procedures.
• Consider how amendments may unintentionally trigger a deemed resettlement with tax implications.
• Review key High Court rulings, including Commercial Nominees and Clark, for continuity tests.
• Understand the capital gains tax events (E1 and E2) that may arise from trust resettlement.
• Evaluate potential stamp duty liabilities varying by jurisdiction and transaction type.
• Recognise that a trust split can create separate trusts, triggering new tax and legal obligations.