Periodic charges on a trust

Q. Does the software calculate periodic charges on a trust asset?

A. No, Voyant will not calculate the periodic charges but you can set them up manually in the plan by creating an expense at each of the intervals it would be payable and you can estimate the tax bill at the time, the assets chart might help you because this will project the value of the trust forward so that you can establish the tax payable.

Note that any expense will be met in the first instance by income in the plan and other assets, you cannot specify a trust as a source to meet an expense in the plan. If you want the expense to come from the trust exclusively then you can set a planned withdrawal from the trust to meet this expense.

To do this go to Advanced settings > Liquidation limits and planned withdrawals, note in the example below the event is selected as "periodic charge 1" and the amount of the tax charge is input as fixed without inflation, this will ensure that a sum to meet the exact expense is withdrawn from the trust.

Now by setting the planned withdrawal the software will assume that this will happen every plan year until the trust is exhausted so you will need to create a step down event for the year after the withdrawal to ensure no further withdrawals are made from the trust.

To do this you firstly will need to enter an event in the plan the following year after the periodic charge is taken in the example below this is called "no withdrawals 1" . Then go to Advanced settings> Step up/down and untick the fields we do not require as shown below:

Leave "planned withdrawals" ticked and then click into it and then select the first option "no withdrawals"

 

You should now have successfully entered a planned withdrawal to match the amount required for the periodic charge and you have also ensured no further withdrawals will be made from the trust. You will now need to repeat this process for any other more periodic charges later on in the plan.