Tax effective will planning

Article by Ralph Ray, tax consultant with Wilsons of Salisbury. This article appeared in the June 2005 issue of Tax Adviser. From 6 April 2005 (but retroactively since 18 March 1986) a new income tax regime started – namely the pre-owned assets tax. This makes lifetime estate planning very complex and difficult in many contexts. Emma Chamberlain has ably outlined the pre-owned assets tax regime rules in her articles in Tax Adviser, in June 2004, July 2004 and December 2004, and Treasury Regulations and Guidance Notes were issued on 16 March 2005. Accordingly, practitioners and their clients are well advised to concentrate on estate planning on death by way of tax efficient wills and variations which are generally outside this ‘revenge’ tax.

This article concentrates on six main estate planning aspects, namely:

• use of discretionary trusts using two IHT nil rate bands;
  
• use of discretionary trusts: two years s144;
  
• flexible life interest wills;
  
• discretionary trusts: business property relief and agricultural property relief;
  
• implied or precarory trusts s143; and
  
• variations and disclaimers.
  

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