Autumn 2006 Newsletter Contents Into The Unknown Season Of Goodwill Farewell Andre Toon Done Doon Day Of Reckoning Artistic Licence Gizmos Again A Free Lunch Sweet As Nectar Security Concerns Going For A Spin The Cap Does Not Fit While It's Hot? Code Cracking Bad Connection Broken Trusts You Can't Take It With You Dividend Returns IR35 RIP? Spam Spam Spam Breaking Up Duty Calls Time Shift Moving Vans

Broken Trusts The dust has now settled on this year's Finance Act, but lawyers and accountants are still struggling with the massive changes made to the rules on trusts. For years, accumulation and maintenance trusts have been a good way of minimising inheritance tax when passing assets down the generations in a family. Life interest trusts, set up in wills or during lifetime, were also favourably treated. All that - or most of that - has changed. Now, most trusts will be subject to an immediate IHT charge when they are set up - although the starting point for IHT is £285,000, so setting up a small trust won't trigger any tax. There are also potentially charges every 10 years and when the property leaves the trust. The advantages of A&M trusts and life interest trusts are severely restricted. A campaign by the professions did manage to tone down the original proposals which were even worse. However, it still seems likely that most wills should be reviewed to see how the new rules affect them. Trusts are commonly used in wills and estate planning, so even if you don't have a trust now, you might find that your will sets one up. Someone should think about whether that is still the best plan. Of course, it's a good idea to review a will regularly anyway, so prompting everyone to do so may even save some people tax where they had let the document get out of date. But if everyone took the threat seriously and asked their lawyer to look at their will at the same time - which is what we all ought to do - the lawyers would be completely snowed under. Conspiracy theorists have suggested that this measure will raise very little IHT, but will raise a great deal of VAT on lawyers' fees. Surely even Gordon Brown can't be that devious?