I wonder if anyone on AWeb can put me straight. I'm a trustee of a discretionary trust which has sold its last property and is to be wound up. The sole beneficiary is domiciled and resident in US and has been for 25 years plus. For various reasons, there have been no income distributions and the accumulated net income is £56,000. The trust has total assets of £250,000.Tax pool is £16,500. Is it possible to release just sufficient as income to use up the tax pool and then just distribute the balance as capital? Or do I have to make an income distribution of the entire accumulated income? If the latter, this will give rise to an Income Tax liability because the tax pool is insufficient. Can that tax liab be deducted from the accumulated income total so that I can demonstrate that the entire accum income has been distributed? As you may see, I've not had to handle this type of situation before. Any help would be much appreciated.
Closing a discretionary trust