Top 10 reasons still to use Trusts: the 800 year old solution to tomorrow's problems

With significant changes to Inheritance Tax (IHT) reliefs for agricultural and business property due to take effect in approximately seven months, affected individuals are exploring every available planning strategy to mitigate the impact. For those who are asset-rich but cash-poor, the prospect of a 20% IHT charge on death is deeply concerning and threatens the continuity of long-held family assets.

The English trust has a fascinating history. It dates back to medieval times, when knights heading off on crusade would hand over their land to someone they trusted to manage it in their absence. This practice laid the foundation for what we now know as the legal split between ownership and benefit: trustees hold the legal title, but the real value belongs to the beneficiaries.

There have been a flurry of media reports that the Treasury is considering changes to the IHT regime at the next Budget in the form of a gifting cap or amending the tapering rules on gifting. The reports make clear nothing has been decided but the kite-flying will no doubt focus minds on estate planning in the weeks ahead.  

Is your camel’s back broken yet?  Or will this year’s Autumn Budget be the proverbial last straw?

Rachel Reeves’ Autumn Budget in 2024 not only brought in an immediate increase to capital gains tax (CGT) rates, but also announced a swathe of changes to the taxation of international individuals which mostly took effect on the 6th April this year. 

The increase in the value of cryptoassets has undoubtedly contributed to the continued interest and adoption of this still relatively new asset class across organisations and individuals. The ease of purchasing, selling or transferring a cryptoasset has improved significantly over the last few years (and which has in part stemmed from the development of the regulatory environment). However, there is still a technical barrier to entry. This presents a practical problem; if your assets pass to your loved ones on your death, how do you ensure that they are able to actually access and benefit from any cryptoassets that you hold?

The Budget proposals concerning inheritance tax on farms and farm businesses have understandably created a furore amongst farmers and landowners.  Both sides should be considering whether a compromise could be agreed.

The Budget last month sent shockwaves through the UK’s farming and family business communities with the revelation that from 6 April 2026, 100% IHT relief through Business (Property) Relief (“BR”) and Agricultural Property Relief (“APR”) will be capped at £1m of assets (combined agricultural and business property) and over that amount, will be charged at an IHT rate of 50%. Currently there is no limit to the amount of either relief.

Please see below for our immediate thoughts on pertinent parts of the Budget affecting our client base but do let us know if you have any questions or there is anything you wish to discuss.

If someone dies domiciled in the UK for inheritance tax (IHT) purposes (or non-domiciled but with UK assets exposed to IHT), this is a tax that cannot be ignored.

It is fair to say that we as a society are not comfortable discussing death. It is daunting – you have to think about Wills, funerals, organ donations, Lasting Powers of Attorney, and care planning. You cannot escape death, but you can ensure your plans are in place. Unnerving as it is, the alternative to not talking, thinking and planning is problems and heartache for loved ones and arguments over property, assets and funerals. Wills and Lasting Powers of Attorney need to discussed more openly and acted upon.

The concept of matrimonial regimes has become increasingly well known in England, having been a stalwart of the French marriage process for centuries. International clients and those with Anglo French connections are asking the right questions about French marriage contracts versus English prenuptial or postnuptial agreements more frequently, being more aware of the significant differences between the two and also the need for cross-border legal advice to ensure their interests are protected should they later choose to divorce.

With the recent Spring Budget came a relatively small update to Inheritance Tax (“IHT”) whereby applications for a ‘Grant on Credit’ no longer require Personal Representatives (“PR”) to seek commercial loans to pay IHT before they are able to apply for the Grant.

The government made a commitment to protect 30% of the UK’s land and sea by 2030, adopted globally at the UN Biodiversity Summit COP15 in December 2022. With Defra recently announcing the desire to work collaboratively with landowners to meet the “30by30” target, the question is what implications this will have for participating landowners, particularly in the field of taxation, where much uncertainty remains.

On 8 February, Labour announced it will no longer be spending £28bn a year on environmental projects if it wins the upcoming general election. Instead they would cut funding for their green prosperity plan in half to a figure under £15bn due to economic changes since the plan was announced.

A growing number of couples live a DINK (“dual income, no kids”) lifestyle instead of the historically ‘traditional’ family structure that includes having children. There has also been a rise in the “single income, no kids” (SINK) lifestyle.

We wrote in August 2020 that the Government announced that legislation would be introduced to allow remote electronic witnessing of wills but this was only to be temporary.

An executor’s legal duty is to distribute the estate according to the terms of the will. This sounds straightforward, but what happens if one of the beneficiaries is unknown or missing?

Two out of five business owners in the UK are planning to sell, wind up, or crystallize assets within the next year. According to a recent poll conducted by Censuswide, 40% of the 504 surveyed business owners with revenue exceeding £5 million expressed their intention to exit within the next year. Additionally, 23% of UK business owners have expedited their plans to sell or wind down their businesses in the past 12 months.

Running an estate is a long-term project and even with a clear aim, the succession plan is bound to encounter unexpected challenges, such as a law or family change. To provide the best opportunity to thrive, I find that setting and sticking to principles, and applying a disciplined, consistent approach normally pays dividends.

One of the biggest risks to the future of a landed estate is tax and specifically the inability to meet a liability without recourse to a sale of core estate assets. Taken to an extreme, unplanned tax charges can result in an estate having to be sold off or broken up to meet the liability.