Parents, in particular, face a bewildering choice of structure options when it comes to making provision for their children in their Wills. Often the prospect of their child inheriting a large sum of money at age 18 does not appeal. Instead, being able to delay a child taking control of their inheritance until age 21 or 25, or later, or arranging for a series of staggered payments over the years is preferred. However, the tax consequences of the various options are not always explained and parents can end up making inappropriate choices.
In 2006, the Government of the day decided that parents should have to pay for the privilege of keeping assets tied up in trust beyond a child’s 18th birthday, by levying a capital tax on the child’s will trust in proportion to how long the child’s will trust lasts.