Tuesday, October 15, 2019
In the United Kingdom, fewer and fewer wealthy families are utilizing trusts in their estate plants. According to Her Majesty's Revenue & Customs, there was a 6% drop in trusts that filed a tax return from 2017-18 compared to 2016-2017.
One of the primary reasons that families have stopped placing their assets in trusts is that in 2006, then chancellor Gordon Brown announced reforms to stop trusts “being used to shelter wealth from inheritance tax”. Trusts once upon a time were used for their privacy benefits, but as of 2017 there is now an online registry of Trusts in the UK. Mike Hodges, partner at accountancy firm Saffery Champness, admitted that, “A punitive tax regime and a host of draconian regulatory requirements [has created] a toxic combination which has compelled increasing numbers of people towards alternative options for asset protection.”
And there could be more reforms and changes to trusts in the future. “Both major parties in the last general election pledged different reform measures aimed at improving transparency and with such measures inevitably comes greater uncertainty over the future of trusts and an increased reluctance for people to use them,” Hodges said.
See Emma Agyemang, Wealthy Families Continue to Ditch Trusts, Financial Times, September 26, 2019.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.