Commentary

I5.554 Tax implications—transfers out of an 18–25 trust

IHT, trusts and estates

I5.554 Tax implications—transfers out of an 18–25 trust

I5.554 Tax implications—transfers out of an 18–25 trust

Where settled property ceases to be property within an 18–25 trust there is a charge to tax1 unless:

  1.  

    (a)     the beneficiary, B, becomes, at or under the age of 18, absolutely entitled to the settled property, its income and any accumulated income2. Note this only covers the case where B becomes absolutely entitled at or under 18, not where he becomes entitled at age 25 or at any other time after attaining 18

  2.  

    (b)     the death of the B occurs under the age of 183. This exception means that there is no charge where B dies before the age of 18 and as a result of this some or all of the property in which he was interested ceases to be held on 18–25 trusts. Again, it must be noted that this exception does not cover the case where B dies after his 18th birthday and before he has attained an absolute interest at 25 or under

  3.  

    (c)     the settled property becomes, at a time when B is living and under the age of 18, property to which the bereaved minors trust rules apply4. This exception relieves a charge when settled property within the 18–25 trust regime becomes subject to the trusts for bereaved minors rules.

  4.  

    This might happen because when a child of a testator is contingently entitled to a legacy at age 25 under 18–25 trusts, the trustees might decide that his contingent entitlement should be brought

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