Government proposals relating to trusts mean that thousands of people may have to rewrite their wills to protect the interests of their children, the Law Society has warned.
It has written to the government to outline the effect that measures contained in the Finance Bill could have on bereaved minorsâ€™ trusts (BMT) and 18-25 trusts. These are often set up by parents to provide for their children in the event of them being orphaned.
A Law Society statement says: â€œProposed new rules would mean that trustees â€“ those responsible for managing the trust assets for the child or other beneficiary â€“ might not be able to, for example, acquire a home for the beneficiary or meet education or maintenance costs, without the involvement of the court.
â€œThis could cost trusts, and their beneficiaries, thousands of pounds in court and legal costs.
â€œThe government’s proposed amendments are intended to have effect in relation to property transferred on or after 8 April 2013. However, any will which provided for a BMT and 18-25 trust which have not taken effect (as the testator has not yet died) will be affected, as property will be transferred into the trust only on death which could be after 8 April 2013.
â€œThe effect of the changes is certain testators who wish their funds to enter the tax advantaged BMT and 18-25 regimes will have to rewrite their wills. The proposed change will have a wide ranging and adverse effect on many wills, past and future, and will have costly implications for many members of the public.â€
The Law Society has reported its concerns to HM Revenue & Customs and is urging it to reconsider the proposals. We shall keep clients informed of developments.
Please contact us for more information about the issues raised in this article or any matter relating to trusts and wills.