If you’ve agreed to be a trustee – beware!

So, your best friend or family member has asked if you would be an executor in their will. This usually includes duties as a trustee, especially where children are involved and their legacy is to be held in trust.

Well here you have to be careful. Failure to register and provide the trust accounts to HM Revenue and Customs (HMRC) in a timely manner will carry penalties. As you can see below, you will need to gather a lot of information. This is best done before the testator or settlor (person writing the will or setting up a trust) dies. If you are likely to face this issue, professional help is at hand which still leaves you in control of the trust but the administrative burden can be handed over to a team who specialise in these matters.

All trusts and estates with a tax liability must be registered with the HMRC trusts and estates online services. This includes any that you’ve already used form 41G to tell HMRC about.

You’ll need to sign in to, or set up a Government Gateway account to use these services. You can do this within each service. You must submit a Self-Assessment Trust and Estate Tax Return after the end of each tax year to report each trust or estate’s income and gains.

You must use the Trusts Online Service to register your trust with HMRC, to pay Income Tax and Capital Gains Tax. For new trusts do this by 5 October of the tax year after the trust is set up or when it starts to make income or chargeable gains, if this is later.

You’ll be asked to give details of:

  1. the trust
  2. trustees
  3. settlors
  4. beneficiaries
  5. other people with influence or involvement in the trust
  6. assets settled into the trust
  7. the tax years the trust needs to declare liability to Income Tax or Capital Gains Tax for
  8. You may also be asked for details of:
  9. the deceased person, if the trust is being established by a will or under the rules of intestacy
  10. protectors, if any have been appointed

Gather the information needed to complete the forms in good time; i.e. before it is needed.

If you need help making these preparations, contact us or give us a call.