Nichola Ross Martin looks some of the traps in the settlement provisions for parents.
What are referred to as the settlement provisions for tax are now found in Chapter 5, Part 5 of ITTOIA 2005. The rules span s 619 to s 648 and they impose a tax charge on a settlor of a settlement where he or she:
- retains an interest in the property that is settled and any resulting income is or may become payable to or applicable for the benefit of him or his spouse, or if,
- makes a settlement in favour of his unmarried minor children, or if,
- receives a capital sum from a settlement he has created
A settlement is a wide term which includes any disposition, trust, covenant, agreement, arrangement of assets (excluding charitable loan arrangements and wills).
A settlor is a person (male...