Advisers fume over trust changes

Advisers and tax lawyers have reacted angrily to suggestions from paymaster
general Dawn Primarolo that the government’s clampdown on trusts in last week’s
Budget would only affect a small number of people.

‘Virtually every will in the country that has been prepared on legal advice
will need to be rewritten,’ Edward Nugee, QC, head of Wilberforce Chambers,
wrote in a letter to The Times today.

The move affects no more than ‘a tiny fraction of the wealthiest top one per
cent of the population’, Primarolo had insisted.

Advisers had initially suggested as many as 100,000 families would be
affected by the move, which adds new inheritance tax charges to certain trusts
in wide usage.

One aspect of the move that has attracted particular attention is the
suggestion that trusts where the child or grandchild beneficiary takes control
at age 18 will have tax advantages to those where that does not occur.

Advisers have pointed out that transferring the trusts to 18-year-olds does
not always make sense.

Related reading