Reassessment - Part 2

This morning the three members of the Dave Pearson Trust - Margaret Mytton, Chris Pearson, and I, went to meet Amanda Freeman of Myerson Solicitors in Altrincham. Amanda has particular experience in wills and inheritance tax planning, and knowledge of estates and trusts. We chose Myerson since they are a law practice recommended by Artlaw.  

Amanda quickly made us feel relaxed, despite us being beginners in understanding the law in these areas. All three of us would admit to being naive about this complex area of law, even though we have been acting as trustees for over 7 years. She listened to our concerns, and asked us a number of questions about the Trust. We had with us a copy of the Will, the Trust documents, and an account of the Trust's financial dealings since 2008 (as well as our passports to show that we were who we claimed to be). 

She said that, well, we had come at exactly the right time - as there are still over two years left before (because of the 10 year rule) we need to be reassessed for Estate Duty. She said that this will give us adequate time to decide what course of action to take and then to go to the Inland Revenue to discuss the Trust's tax affairs. 

One thing I had never fully understood and which Amanda clarified for me, was the fact that the kind of Trust we are (apparently a 'Relevant Property Trust') can make over what is called a 'Holdover Election'. This can only be done within the first 10 years of a Trust existence. In effect, it would enable us, if we chose, to return the Estate back to Chris Pearson, who was the sole beneficiary of the Will as Dave's son. 

The advantage of this to the Trust would be that the Estate Duty issue would then cease to exist - although Capital Gains Tax would still need to be paid on any sales of the work. It would mean that Margaret and I would no longer be Trustees, and the Trust would be wound up. The downside is that it would place all the responsibility for the paintings and the tax back with Chris - and it was to avoid precisely this that was the main reason for establishing the Trust in the first place. 

Still, many things have changed over the last decade. For a start, we now know far more about exactly what artwork the Estate owns, and we also have more knowledge about the value of individual pieces of work than we had in 2009. This information would help Chris should we decide to wind up the Trust - and there's also no reason why we shouldn't continue to help Chris should he want us to, or equally he could employ others to give him that support.

But all of this is still a way away. All three Trustees will no doubt think over what we learned from Amanda today, and she is suggesting that we have another meeting soon with one of her colleagues who is an expert on the art market. After that, it will be time to make a  decision on what course of action we want to take and then make our submission to the Inland Revenue.