Land held in trust – charges under the relevant property regime

The massive upheaval in the IHT treatment of trusts following the 2006 Budget and Finance Act makes it clear that, in the Revenue eyes, the normal tax regime will be that which, before 22 March 2006, applied in practice only to property held on discretionary trusts. The starting point will have been a chargeable transfer. This might have occurred on the death of the settlor where the trusts arise under the will of the testator. Trusts can also arise under the intestacy rules, but in general the trusts which arise under the intestacy rules will either be Immediate Post Death Interests, such as the life interest enjoyed by a surviving spouse, or they will be the ‘statutory trusts’ for minor children, or sometimes remoter relatives of the intestate. Under the statutory trusts the minor will of course become absolutely entitled at the age of 18, thereby avoiding the rigours of the relevant property regime.