Trusts? No thanks!
Simon Sweetman wonders why advisers and clients don’t realise that trusts are often more trouble than they’re worth.
As I finished putting another trust case in order and getting its tax returns up to date, I reflected on the problems caused by trusts.
There have always been problems. Twenty years ago I was dealing with a countess who wished to do some IHT planning. It turned out, however, that there was nothing to do because she owned almost nothing. All the assets were in a trust of which she was the life tenant. When she married the man who was then the heir to an earldom she was on the stage and well to do families are often cautious about that sort of thing.
But at least they knew they needed advice. The proliferation of nil-rate band discretionary trusts used as a simple inheritance tax (IHT) planning device in recent years has left untold numbers of disconnected trusts out there, all set up by over enthusiastic will planners, even when the size of the estate didn’t merit it.
Passing over the embarrassing ones where the trust accidentally absorbs the whole estate, there are still problems.