IHTM42936 - Employee benefit trusts: conditions for relief: power to transfer funds to another settlement

Where the employee benefit trust (EBT) contains powers to appoint funds to the trustees of other settlements the trust may not qualify under IHTA84/S86. This will depend on whether the trustees of the EBT are able to appoint to any other settlement; or only to ones which have a class of beneficiaries limited to those who are able to benefit under the EBT.

Where the power of appointment is not limited to settlements which can only benefit the class of beneficiaries included in IHTA84/S86 the EBT cannot qualify under IHTA84/S86. Although this power may never be exercised, the trust still permits people other than those described in IHTA84/S86 to benefit.

If the trustees of the EBT only have the power to appoint to the trustees of another settlement which itself qualifies under IHTA84/S86 as regards the company concerned the trust should still qualify as IHTA84/S86(5) allows transfers between IHTA84/S86 trusts (IHTM42947).