Summer Newsletter - THE AGE OF INHERITANCE
As well as changing the tax treatment of trusts, the Finance Act 2006 impacts on your decision making process for legacies for minors.
Many people have created trusts in their wills, perhaps unknowingly, making provision for those under the age of 18 (minors). The legislation provides an exception where the beneficiary is a bereaved minor where at least one of their parents, step-parents or person with parental responsibility has died but otherwise a trust will arise which will be subject to the various returns to the Revenue.
When you have children or make bequests to those who are young, you should always consider when they should inherit the capital i.e. at 18 or older. The tax implications may not be too onerous for trusts which arise between the ages of 18 and 25. However you can avoid the administration costs in completing the relevant inheritance tax returns at that time by allowing the capital to vest at age 18.
This is not appropriate in every case and as always, advice relevant to your individual circumstances should be sought. Contact Kathryn Tarry in the first instance.