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Inheriting the changes

21 September 2006 / Carolyn Steppler
Issue: 4076 / Categories: Comment & Analysis , Inheritance Tax , Trusts

CAROLYN STEPPLER takes a practical look at inheritance tax charges on an accumulation and maintenance trust under the new rules.

WIDE RANGING CHANGES to the inheritance tax regime for trusts were introduced by Finance Act 2006. While existing interest in possession trusts may be grandfathered, this is not the case automatically for accumulation and maintenance trusts. Any A&M trust in existence which does not provide that beneficiaries become entitled to income and capital at 18 will fall within the new rules from 6 April 2008.

CAROLYN STEPPLER takes a practical look at inheritance tax charges on an accumulation and maintenance trust under the new rules.

WIDE RANGING CHANGES to the inheritance tax regime for trusts were introduced by Finance Act 2006. While existing interest in possession trusts may be grandfathered this is not the case automatically for accumulation and maintenance trusts. Any A&M trust in existence which does not provide that beneficiaries become entitled to income and capital at 18 will fall within the new rules from 6 April 2008.

Previously A&M trusts were subject to a favourable inheritance tax regime whereby transfers into these trusts were potentially exempt transfers i.e. would fall outside the donor's estate for inheritance tax purposes if they survived the gift by seven years and property within the trust was not subject to the relevant property regime.

Following the changes brought in by Finance Act 2006...

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