SPECIAL TRUSTS

[CLIVE-TRIANGLE]

Thank you to all the responses....but do I go with Clive-Triangle's loan from beneficiary or Dave-A's donation....Implications are very different....balance sheet vs income statement....donations tax....

You should not attempt to shape a transaction to suit the outcome of a tax position. Those monies are a compensation award made to the young man and are in the trust's bank account due to convenience, rather than a decision made by him to make a donation to the trust. The whole purpose for the existence of the trust stems from the belief that he is not able to manage his affairs properly, and to propose that he is able to resolve to make a donation is somewhat contradictory. I also am sure that it complicates the position of all concerned, which is unnecessary.

The issue of "loan" is merely accounting terminology; the trust received money that does not belong to it, and is holding it in trust for the beneficiary.