Private wealth

Why make a trust?

Trusts are tax efficient and afford flexibility to a person who wishes to pass assets to certain people during their lifetime or upon their death.

Taxation of trusts

Other than for some limited exceptions, if you transfer an asset into a trust during your lifetime, it will be immediately subject to IHT at 20% to the extent that the value of the asset being transferred (when added to any similar transfers made in the previous seven years) is more than £325,000 (the nil-rate band).

The New Inheritance Tax Residence Nil Rate Band

The new Inheritance Tax Residence Nil Rate Band will become available from 6th April this year, meaning that an additional tax-free allowance of up to £175,000 per person may apply if the family home passes to certain relatives. Some, although not all, gifts into trusts may also qualify.

Issues to consider when making a Will

Making a Will is your chance to control what happens to your assets once you have passed away, so it makes sense to give your Will some careful thought. Your solicitor can guide you through all the issues you need to consider when making a Will, but the following questions might be a helpful starting point:

Inheritance Tax (“IHT”) Exemptions

Gifts to the following recipients are completely exempt from IHT, irrespective of whether such gifts are made during a person’s lifetime or on their death: spouses or civil partners;UK charities;certain specified bodies for national purposes; and UK political parties (subject to certain conditions being met
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