Trust management expenses: ‘properly chargeable to income’: apportionment and tax: recording and evidence: expense not separately recorded: time records not kept: no documentation: ‘realistic estimate’
The trust deed provides for the two trustees to receive fees of £x each. The trustees have not kept time records. They know that they considered trust capital investments and reviewed the trust accounts prepared by their accountants. They also know that they decided not to make any distributions that year, and to accumulate all income. The trustees should decide whether any part of the cost of their fees is exclusively for income benefit. If so, they should make a ‘realistic estimate’ and charge that amount to income.
The trust deed provides for the sole trustee to receive fees of £x. The trustee has not kept time records, and there are no minutes or other documents to refer to. At the end of the year the trustee considers whether he spent any time on matters that confer a benefit exclusively on the income beneficiaries. He recalls that he spent time considering various investments, decided to sell a substantial trust asset, and each quarter decided whether to pay the beneficiaries. He decided to make no payments to the capital beneficiaries, and made payments to the income beneficiaries. The trustee should decide whether any part of the cost of his fee is exclusively for income benefit. If so, he should make a ‘realistic estimate’ and charge that amount to income.