Charles Hutton contributes to Investors' Chronicle exploring the role of trusts in families' financial planning
min readTrusts are commonly used in financial planning to manage inheritance, protect assets, and support beneficiaries in specific circumstances, such as young recipients or blended families.
Discretionary trusts allow trustees to control how assets are distributed among a defined group of beneficiaries, often guided by a ‘letter of wishes’.
These trusts fall under the ‘relevant property’ regime, meaning they can trigger immediate and ongoing inheritance tax (IHT) liabilities, including charges when assets are transferred, held, or distributed.
Charles Hutton, Partner in our Private Client team, comments in Investors' Chronicle on discretionary trusts:
A 20 per cent charge applies to any value above the nil-rate band (generally £325,000). If the settlor dies within seven years, a further charge of up to 20 per cent may arise.
During the lifetime of the trust there are potential IHT charges every 10 years and also when capital is distributed, known as 'exit' charges. These charges are at a maximum of 6 per cent.
Read the full article in Investors' Chronicle here (subscription required).
