<B>Tax feature:</b> The implication of budget changes to the tax treatment of trusts. By Mark Giddens
Hidden away in Budget Notes 25 and 35 are some radical ' and largely unexpected ' changes to the taxation of trusts.
Continued...
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Gordon Brown
It appears that Gordon Brown really dispises anyone who has worked hard in their lives. As a class warrior he most probably still believes that trust are for the super rich...who atleast still contribute more in tax to society and take less resources than the people he is dying to look after!!...the sooner he goes the better!
Deborah,
I have assumed your question to imply that, should you pre-decease your husband, you wish him to be able to continue living in the property for some time – perhaps even until his death – at which time the property will pass to your daughter.
It is perfectly possible to make arrangements before your death to ensure this scenario thus providing you with certainty as to what will occur. The use of wills, trusts etc can not provide this as the efficacy of the arrangements can not be tested until death occurs. In the meantime the Treasury’s view that the treatment of trusts, as they are ongoing entities, can be altered at any time will necessitate continued vigilance.
I do however think that, as usual, the Treasury has brought forward ill-conceived and ill-thought out legislation which was intended to tackle what they consider to be tax-avoidance and not those arrangements which are primarily to provide the protection to which you refer. I think it likely changes will be made to exclude such unintended consequences.
Deborah-it's not tax which is the issue
You don't have a drafting problem-what you have is a practical issue.
A simple provsion that on your death your house is left to your daughter,subject to your husband having the right to live there during his lifetime will be compliant with the new rules and avoid defining a 'relevant property' trust.
How your daughter and your husband deal with that is a different, and not a tax question.
What you can't do any longer for example,by using a proteceive trust mechanism is to stop your daughter selling her reversionary interest as soon as you die.
Who cares!
Trusts have not been the most effective method of IHT or CGT mitigation for at least 10 years;Mr Brown can alter the tax-treatment howsoever he chooses. It is an non-event.