John Millican, Managing Director and Financial Adviser
Posted in Financial Advice, Trusts on 20.07.10

Some good news for trust planning

The Perpetuities and Accumulation Act came into effect on 6 April and introduced two significant changes.  Firstly the maximum life of a trust has been extended from 80 to 125 years which will enable more effective planning to be achieved for future generations especially given that life expectancy continues to increase.  In simple terms, the timescale by when trust assets have to be appointed to beneficiaries is now 125 years.

Secondly, the previous restriction on the accumulation of trust income has been lifted, it was the case that such income could only be accumulated for up to the first 21 years of the trust or while the beneficiaries were minors.  The new Act allows trustees to roll up trust income for the entire period of the trust.  This creates greater flexibility which in turn enhances the planning opportunities because settlers may not wish the next generation when they are beneficiaries to automatically receive all the income a trust is generating.

Existing Trusts

The new changes do not apply to existing trusts, those established before 6 April and the Act specifically prevents trustees invoking the new rules.

This is of concern in relation to Will planning, as many trusts are created in this way to hold part of even all the estate assets.  In this situation the new Act only applies to Wills executed after 6 April 2010, and not the date when the Will comes into effect which is the date of death.  Therefore it may be appropriate for some clients to reconsider their Will planning, especially where long term trust planning is concerned for future generations or for young children/grandchildren.

If you believe the new Act may be relevant to your planning please contact John Millican.

 

If you would like to know more about how we as Financial Advisers can help you set, plan and achieve your financial goals then financial planning section of  our website: Financial Planning or send us email at: email@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

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John Millican, Managing Director and Financial Adviser
Posted in Financial Advice, Trusts on 20.07.10