LawWorks News

Gift Duty - December 2012

As many of you are aware Gift Duty was abolished in October 2011 and we are in the process of contacting all of our clients who have current gifting programmes in respect of loans that they have personally made to their family Trust(s).  Many of our clients are asking whether they should make gifts to their family Trusts in respect of all of the balance debt(s) due, regardless of the size of those debts.  The answer is not straightforward and would usually involve a discussion between both us and your accountant to make sure that everything has been considered.

It is important that the resulting effect of any gift is what you intended and best suits your circumstances.  Once your assets have been transferred into a Trust and "gifted away” those assets are no longer yours. It will depend on the terms of the Trust Deed and the discretion of the trustees as to whether you can continue to enjoy the assets of the Trust and/or derive income or capital from these assets to supplement your income or lifestyle. 

For some people, it is advisable to leave a balance "debt” owing, which if you require capital from the Trust you can demand repayment of as the balance debt due. If there is no balance debt due to you, you may no longer have the ability to draw cash from the Trust when you need it.  This may not have been your intention. 

There may be competing and compelling reasons to either gift or not to gift. No option should be considered in isolation. 

Any future transfer of funds/assets to a trust should still be documented whether that transfer is by way of loan or gift. 

If you wish to discuss your particular circumstances or if you have any questions please call us. 

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