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Up, up and away: pilot trusts

Chris Thurlow explains the many benefits of pilot trusts

25 September 2012

Despite adverse legislative changes in recent years, the discretionary trust (whether full blown from the outset or starting as a pilot trust) remains a major tool for the private client practitioner for assisting clients to protect assets, protect individuals and provide flexibility, particularly under the terms of an individual’s will.

Regime change

One of the downsides of discretionary trusts is the inheritance tax (IHT) relevant property regime that applies. The regime also applies to many trusts for minors, other than bare trusts or bereaved minor’s trusts, and to a more limited extent to 18-25 trusts, which would have qualified as accumulation and maintenance (A&M) trusts prior to 2006.

Generally, the regime imposes an IHT charge on each ten-year anniversary of the trust being established, as well as an exit charge when capital is distributed to ...

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