Q&As

A trust was set up as an accumulation and maintenance trust but now consists of three parts: an age 18-25 trust, a qualifying interest in possession (QIIP) and relevant property. When calculating an exit charge for inheritance tax purposes on the age 18-25 part of the trust, would the calculation include the initial value of only the funds now on 18-25 terms or does calculation include the initial value of the entire settlement (ie including the funds which are now a QIIP or relevant property)?

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Produced in partnership with Camilla Bishop of Keystone Law
Published on: 08 April 2022

In general, see Practice Note: Taxation of age 18–25 trusts—IHT.

In answer to the question, when calculating the 18–25 exit charge only the element of the assets that qualify as an ’18–25’ trust is included in the calculation plus any 18–25 trusts created on the same day. This is because assets in an 18–25 trust are not strictly ‘relevant property’.

For occasions of charge prior to

Camilla Bishop
Camilla Bishop

Partner, Keystone Law

Camilla is an experienced lawyer who specialises in all aspects of estate planning with a particular focus on Inheritance Tax. As an expert in will drafting and the use of trusts along with trust administration, she provides practical tax-efficient solutions and deals with everything from everyday family needs to the very complex.
 
Camilla is experienced in estate administration and probate, advising on reliefs and exemptions (including Business Relief and Agricultural Relief) and post-death planning using deeds of variation.

Camilla’s expertise also extends to assisting elderly and vulnerable clients with lasting powers of attorney, deputyship applications and other Court of Protection matters.

Camilla is a full member of the Society of Trust & Estate Practitioners (STEP) and is on the committee of STEP Sussex. She regularly writes topical articles and gives webinars/seminars on estate planning to a wide audience of financial advisers and accountants and is well recognised for complementing the services they offer with a joined-up approach for mutual clients.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Maintenance definition
What does Maintenance mean?

Payments made to a spouse or civil partner or a former spouse or civil partner for themselves or for a child of the family.

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