CG37883 - Separate settlements: variations of trusts: under Variation of Trusts Act

The trusts of an existing settlement may be varied (in particular when the interests of unborn or minor beneficiaries are involved) by way of an Arrangement agreed between those parties of full age and approved by a Court Order under the Variation of Trusts Act 1958 (in Scotland Section 1 Trusts (Scotland) Act 1961) on behalf of those unable to give consent.

 

If so the principles in CG37880 apply. The degree of variation may exceptionally be such as to involve the termination of the original settlement in whole or in part and the creation of a new settlement. The fact that the courts may only consent to variation of the trusts does not prevent this. (If so then consideration must be given to the identity of the settlor, see CG37900.) A variation may also cause a beneficiary to become absolutely entitled to assets as against the trustees.

 

When a Court Order is submitted you should refer this to BAI Assets, Residence and Valuation (Technical). Any reply may include advice on the treatment of the Order for Capital Gains Tax purposes. Alternatively they may refer the case to BAI Capital Gains Technical. No action should be taken in the operational office in such cases until the reply is received.