Last month we reported on the proposed inheritance tax (IHT) changes for trusts. The professional bodies have been lobbying HMRC and the government to reconsider the rules and appear to have had some success. The legislation is being amended on its way through parliament.

In particular, the proposals now seem to suggest that if a child becomes absolutely entitled to assets at the age of 25, rather than 18, then IHT charges may only arise for the seven years post age 18. These changes apply in certain circumstances to existing Accumulation and Maintenance trusts and new trusts for bereaved minors.

Again, as we advised last month, if you have a trust created before Budget Day, there is no need to take any immediate action as the IHT charges will not generally take effect until 2008. However, you may wish to revisit Wills to see if the provisions in existing Wills are still appropriate.

Internet Link: Telegraph article