Trusts and Inheritance Tax
When you transfer assets into a trust, inheritance tax may be due if transferals are valued above the inheritance tax threshold of £325,000.
The person trasferring assets into a trust is known as the settlor.
Trusts and inheritance tax, the basics:
- Unlike with other inheritance tax payments which may be due on your assets once you pass away, inheritance tax on assets transferred into a trust may be payable during your lifetime.
- Inheritance tax may be payable on assets when they are transferred into or out of a trust, when a trust is a part of the estate of a deceased person, or at each ten year anniversary of the assets being transferred into a trust.
- How much inheritance tax you will have to pay will depend on a number of factors including the value and type of trust you are transferring into.
- If you die within seven years of making a transfer into a trust, inheritance tax may be payable up to the full 40%, as with other assets.
- Some assets held in trust may be exempt from inheritance tax, such as property held abroad or government securities.
- Certain types of trusts may also be exempt from inheritance tax. For example, in some circumstances, if you place assets into a trust for a bereaved minor, inheritance tax will not be payable either at each ten year anniversary or on exit from the trust.
Trusts and inheritance tax can be very complex, and it may be advisable to seek professional advice to help you get the most out of your assets if you are holding them or thinking of holding them in a trust. For impartial advice speak to a member of an independent inheritance tax planning advice team, for a free no obligation initial consultation.
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