Discretionary Trusts and Bankruptcy

Discussion in 'Wills, inheritances and gifts' started by gearoidc, Nov 4, 2016.

  1. gearoidc

    gearoidc Frequent Poster

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    If one of the beneficiaries of a Discretionary Trust is bankrupt, can the trustee postpone payment to that beneficiary until such time as the bankrupt has exited the bankruptcy process?

    If property is put in a Discretionary Trust for a beneficiary at a time when the beneficiary is going through bankruptcy, is that property protected and can it be received by the beneficiary at a later date post-bankruptcy?

    Any advice on this would be appreciated.
     
  2. Vanilla

    Vanilla Frequent Poster

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    4,018
    You need specialist legal and tax advice here, try a cta or step adviser
     
  3. Jim Stafford

    Jim Stafford Frequent Poster

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  4. Jim Stafford

    Jim Stafford Frequent Poster

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    271
    You are confusing Settlors with Beneficiaries. A trust is created by a settlor, who transfers title to some or all of his or her property to a trustee, who then holds title that property in trust for the benefit of the beneficiaries. A settlor who transfers assets into a trust would be challenged if he/she was subsequently made bankrupt.

    Provided the trust documents were expertly drafted, the OA would be unable to force the trustees to make a distribution to a beneficiary. You have to remember, a Discretionary Trust is exactly that: Distributions are made at the discretion of the Trustees.

    Jim Stafford
     
  5. GabbyTheKing

    GabbyTheKing Registered User

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    11
    DTT should also be considered surely? IMO most circumstances would indicate that an individual subject to bankruptcy would be subject to DTT? Is there a way around that?