Mary’s will provided for a discretionary trust to be created on her death. There were two beneficiaries (objects) of the trust, Mary’s son, David and her daughter, Ciara. David and Ciara are principal objects for the purposes of Discretionary Trust Tax.
Mary died on the 5 August 2024, and her estate consisted of two commercial properties. The properties became subject to the discretionary trust on the date of Mary’s death. On the date of Mary’s death, David was 45 and Ciara was 42.
For the purposes of the initial 6% charge, the latest date is the 5 August 2024, the date of Mary’s death. The trust becomes liable to the initial 6% charge on the 5 August 2024.
As the initial charge arose during 2024, the trust is not liable to the 1% annual charge on the 31 December 2024. The trust is liable to the 1% annual charge on 31 December 2025 and any subsequent years that property is subject to the discretionary trust.