Inheritance tax


The inheritance tax treatment of trusts is complex and depends on the type of trust being used. Lifetime gifts into discretionary trusts and interest in possession trusts carry an immediate inheritance tax charge of 20%. However, this can be avoided depending on the amount gifted into the trust and the availability of reliefs and exemptions.

There is no inheritance tax payable when gifts are made into a bare trust. However, if the settlor dies within seven years of creating the trust then tax may become payable.

During the currency of some trusts tax may arise when payments are made to beneficiaries and upon each 10 year anniversary of the trust. However, careful planning can avoid such tax charges.

Trustees should always seek professional advice before receiving payments into the trust, before making distributions to beneficiaries and before each 10 year anniversary of the creation of the trust.

For anything further, one of our specialists would be delighted to meet you either in our office or in your own home to talk through your requirements and answer any questions. Please contact us at any time.