Existing Pre March 2006 Trusts
The Chancellor changed the rules on the taxation of trusts in his budget speech on 22 March 2006 to bring many trusts and their inheritance taxes liability in line with discretionary trust taxation.
This area is extremely complex and we suggest that you seek advice from us before amending any existing trust. You may also wish to read about this in greater detail in the Inheritance Adviser.com.
If you had an Absolute or Bare trust set up before 22 March 2006 generally the trust is unaffected.
Flexible Trust or Interest In Possession Trusts
If you had an Flexible Trust or Interest In Possession Trust trust set up before 22 March 2006, care should be taken not to change the life tenants in this trust unless you amend the interest to an absolute, non-reversible status, as any change could trigger tax issues.
If you had an Discretionary trust set up before 22 March 2006 generally the trust is unaffected, you still potentially get caught for taxes under chargeable lifetime transfers rules as you did before.