Last chance to change Trusts

Just in case your normal legal adviser haven't told you, any changes to Interest in Possession Trusts (IIP) and Accumulation and Maintenance Trusts (A&M) must be made now to benefit from transitional exemption to the changes to Trusts introduced in the 2006 Budget.

These budget changes bring IIP Trusts and A&M Trusts into line with the current regime, for Discretionary Trusts. Accordingly the following should be considered:

• The beneficiaries under existing IIP, often used in conjunction with Life Assurance policies or Pensions, can be changed now but any changes after 6 April 2008 will potentially trigger an IHT charge.
• Consider setting up Discretionary Trusts, and/or Potentially Exempt Transfers (PETs) every seven years to take advantage of the Nil Rate Band.
• Changing A&M Trusts into 18-24 Trusts, to ensure the beneficiaries are not entitled to the capital at the age of 18.
• Consider appointing a Trust as the beneficiary under Pension Schemes and Death-in-Service Life Assurance rather than paying out directly to named individuals.
• Use an Absolute Trust where you can be certain of the beneficiary.

The clock is ticking and any changes to existing Trusts must be effected before 5 April 2008 to avoid triggering a change to the new regime.