I am a trustee of a will trust set up by the deceased father of my 14-year-old granddaughter. What are the tax liabilities for a residential property bought from the trust monies for rent as an investment until she receives control of the assets between 18 and 25 years of age?

Arthur Weller replies:
This sounds like an 'accumulation and maintenance trust' which is a special sort of discretionary trust. As such, the usual rules for discretionary trusts apply to it, as far as income and capital gains tax are concerned. However as far as inheritance tax is concerned, since the trust is a will trust, it gets favourable treatment. See www.gov.uk/hmrcinternal-manuals/inheritance-tax-manual/ihtm42815.