Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, February 25, 2019

Trusts Remain Out of Favour with Wealthy Families [UK]

In the United Kingdom, advisors warn that wealthy families are steering away from trusts due to increased tax rates and concerns about privacy. The number of trusts that are being utilized has fallen for the third year in a row according to the latest statistics from HM Revenue & Customs. The total income reported in respect of trusts and estates also fell, down £500m or 17 per cent to £2.4bn in 2016-17.

PoundnoteNot only has the image of trusts been damaged by high-profile tax scandals, but the introduction a trust registry in 2017 has caused many clients to worry about privacy. A trust’s income and gains are also now taxed at the highest rates, added Kay Ingram, chartered financial planner at LEBC.

There may still be advantages to trusts concerning the inheritance tax (IHT), as the wealth within a trust is separated from an individual's personal wealth. Therefore assets within a trust are not liable to the 40% inheritance tax rate, as well as avoiding the increasing probate fees in the country. 

The government is currently consulting on how the trusts regime can be reformed to be simpler, fairer and more transparent. The consulting period ends February 28. 

See Emma Agyemang, Trusts Remain Out of Favour with Wealthy Families, Financial Times, February 15, 2019.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2019/02/trusts-remain-out-of-favour-with-wealthy-families-uk.html

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