06 October 2015

The information contained within the following news articles have been pre published. The articles were published on the dates indicated and the information contained within these issues include references to taxation, legislation, regulation and other issues or concerns that may no longer apply

Trusts still worthy


Despite Government changes, trusts should still be at the heart of any estate planning scheme.

Trusts represent a very useful planning tool, in particular allowing you to pass assets on to your beneficiaries while potentially mitigating the impact of inheritance and other taxes.  The Government has, however, slowly tightened up the system and the tax treatment is less generous than in the past. However, trusts should still be at the heart of any estate planning strategy.

The trust is created when the settlor (the person who creates the trust) transfers assets to the trustees, who hold the assets in trust for the beneficiaries.

There are a host of reasons for setting up a trust:

  • You may have a property in which you wish someone to retain a life interest, so they can live there before it passes to your beneficiaries or to allow one person to receive rent from a property but to leave the property to someone else on their death.
  • You may wish to create a trust that pays income to several children, perhaps where you don’t wish them to receive the assets in one go.
  • You may wish to create a trust that leaves assets not just to existing but also to future grandchildren.
  • You may wish to create a trust structure if you are part owner or owner of a business as part of business protection planning.

The rules have however become less generous. Apart from trusts for disabled beneficiaries, all discretionary trusts created on or after 22 March 2006 are likely to be subject to IHT, at the time the trust is created and every ten years thereafter until the trust ends, and on assets leaving the trust. The exact amounts vary for instance, for smaller trusts it may be possible to use the nil rate band so that no IHT is payable when the trust is created.

Many trust beneficiaries were also hit by an income tax rise and capital gains tax rises in 2010. But trusts can still help you manage the balance between capital gains, income tax and inheritance tax with the amounts you have to pay varying depending on the structures used.

Trusts do involve complicated financial planning and a consideration of any appropriate investment strategy as well.  Please contact us now on 028 90 668700 to arrange your appointment with one of our Financial Planners.


Paul Dixon
Chartered Financial Planner

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