Forms of Trust Used By UK Taxpayers
- Accumulation and Maintenance trust
- A variation on the discretionary trust, the A&M does not carry the Inheritance tax disadvantages of a discretionary settlement but can only be established for persons under 25 who must be entitled to income at that age. Allows the accumulation of income within the trust until 25.
- Disabled Trust
- Similar to an A&M trust but established for a disabled person.
- Reverter to Settlor trust
- A trust where, on the death of the life tenant, the property reverts to the person making the gift.
- Nil Rate Band Discretionary trust
- UK inheritance tax is payable at 40% on estates worth over £325,000 for the 2009-2010 tax year. If assets up to that value are placed in a discretionary trust during a person's lifetime, the trust will not be taken into account for inheritance tax if the person survives for a further 7 years. Likewise in a will, many persons leave a legacy on discretionary trusts so as to take full advantage of their nil rate band (gifts to spouses and registered civil partners being wholly exempt).
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