Trust the children

Would you want to leave your entire estate to your children at 18? Probably not, but this is what you may decide to do as a result of changes in this year’s Budget.

Proposed changes to so-called ‘accumulation and maintenance’ trusts mean that assets left under a will, on trust for children will now have to pass to them outright at 18 (rather than the traditional age of 25) to avoid new tax charges. If they inherit outright after 18 they will have to pay a tax charge of up to 6% every 10 years, based on the value of the assets in the trust, as well as an ‘exit’ charge of up to 6% on any distributions out of the trust.

The changes will apply both to lifetime trusts and those created in a will. So if you have already set up a trust (or are thinking of doing so) for your children or grandchildren, or if your will contains actual or potential legacies for them, you may need to seek professional advice. We are exploring ways of avoiding the worst effects of the new rules.

To discuss this issue further, please contact:
Andrew Goldstone
Tel +44 (0)20 7440 7205
andrew.goldstone@mishcon.com