Skandia is warning that absolute trusts to minors could be liable for another tax if the beneficiary is under the age of 18. Gifts to minors, through absolute trusts will be treated as chargeable lifetime transfers and as such they will be liable for tax, as the child can only access the trust once they are 18.
Most people prefer to make a gift to minors in trust, as they are too young to understand or appreciate the value of the gift. However, if a child was over the age of 18 then the gift would be exempt of any tax charges as it would be treated as a potentially exempt transfer. Skandia believe that it must be an unintended consequence of the changes introduced in the last year’s Finance Act.
Our view
This highlights the need for people to take tax and trust planning advice. We are experts in this field, if you need advice, contact us now for a free consultation.