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Taxable wealth of discretionary trust.
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5.—(1) (a) The taxable wealth of a discretionary trust on a valuation date shall include all the property situate in the State which is comprised in the trust on the valuation date.
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(b) The taxable wealth of a discretionary trust on a valuation date shall also include any property situate outside the State which is comprised inthe trust on the valuation date in any case where—
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(i) the settlor is living and is domiciled and ordinarily resident in the State on that date,
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(ii) the settlor was domiciled and ordinarily resident in the State when the trust was established,
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(iii) if the trust was created by will, the settlor was domiciled in the State at the date of his death, or
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(iv) the principal objects under the trust are domiciled and ordinarily resident in the State on that valuation date.
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(c) Where none of the subparagraphs in paragraph (b) applies, the taxable wealth of a discretionary trust shall (in addition to all the property situate in the State which is comprised in the trust on the valuation date) include only that proportion (if any) of the property situate outside the State that is comprised in the trust on the valuation date that equals the proportion that the number of principal objects under the trust who are domiciled and ordinarily resident in the State bears to the total number of principal objects under the trust.
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(2) Where, however, the sole objects under a discretionary trust are a child or children of a marriage either with his or their parent or parents or without his or their parents (or the survivors or survivor of such persons), and a minor child, being one of those children, is living on the relevant valuation date, the property comprised in the trust, shall—
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(a) if the valuation date occurs during the joint lives of the parties to the marriage, be deemed to be property to which the husband is beneficially entitled in possession:
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Provided that, if it occurs when the husband and wife are not living with each other and the husband is not an object of the trust, the property comprised in the trust shall be deemed to be property to which the wife is beneficially entitled in possession,
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(b) if the valuation date occurs during the lifetime of the surviving party to the marriage, be deemed to be property to which that party is beneficially entitled in possession, and
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(c) if the valuation date occurs when neither party to the marriage is an object of the trust or after the death of the surviving party to the marriage, be deemed to be property to which the minor children of the marriage are beneficially entitled in possession in equal shares or property to which the sole minor child of the marriage, if only one such child is living, is beneficially entitled in possession,
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and section 3 shall, in lieu of subsection (1), apply to such property.
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(3) Where it is shown to the satisfaction of the Commissioners that a discretionary trust exists on a valuation date for the exclusive benefit of—
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(a) one or both parties to a marriage, or
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(b) one or more named individuals, for the reason that such individual, or all such individuals, is or are, because of age, incapacity or improvidence, incapable of managing his or their affairs, or for any other analogous reason which, in the opinion of the Commissioners, is sufficient to justify the benefits conferred by this subsection,
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and that no other person benefited from that trust, the property comprised in the trust on that valuation date shall be deemed to be property to which the party or individual aforesaid is beneficially entitled in possession, or, if there is more than one, to which those parties or individuals are beneficially entitled in possession in equal shares and section 3 shall, in lieu of subsection (1), apply to such property.
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(4) In this section—
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“object”, in relation to a discretionary trust, means a person for whose benefit the income or capital, or any part of the income or capital, of the trust property is applied, or may, at any time, be applied;
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“principal objects”, in relation to a discretionary trust, means such objects of the trust as are living on the relevant valuation date and are related in the same degree of consanguinity to the settlor (being a degree of consanguinity to the settlor nearer than that of any other objects of the trust living on that date) and, if there are no objects of the trust on that date who are so related to the settlor, means all the objects of the trust living on that date, and—
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(a) where a body of persons is the object or among the objects of the trust, the members of such body of persons shall be deemed to be objects of the trust, and
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(b) for the purposes of this definition—
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(i) the spouse of the settlor shall be deemed to be of the same degree of consanguinity to the settlor as the children of the settlor and the spouse of a person shall be deemed to be of the same degree of consanguinity to the settlor as the person,
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(ii) “body of persons” means any body politic, corporate or collegiate and any company, partnership, fraternity, fellowship and society of persons, whether corporate or not corporate;
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“settlor”, in relation to a discretionary trust, includes a person by whom property comprised in the trust was provided and a person shall be deemed to have provided the property comprised in the trust if he has provided it directly or indirectly and in particular (but without prejudice to the generality of the foregoing) if he has provided or undertaken to provide property directly or indirectly for the purposes of the trust, or has made with any other person a reciprocal arrangement for that person to provide property for the purposes of the trust and, in any case where there is more than one settlor, each shall be deemed to be a settlor to the extent that he has so provided the property comprised in the trust and a trust shall be deemed to be established as and when and to the extent that property is so provided by a settlor.
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(5) For the purposes of this section, section 3 (3) and paragraphs (b) and (c) of section 3 (5) shall apply with any necessary modifications in relation to property comprised in a discretionary trust which includes an interest which is a limited interest as they apply in relation to property to which an individual is beneficially entitled in possession and which includes an interest which is a limited interest.
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