Trusts and wills are vulnerable to new CGT rate, warns Law Society
Date Published: 24-06-2010
Trusts and wills are vulnerable to new CGT rate, warns Law Society
The Capital Gains Tax (CGT) increase announced in this week’s budget will mean trustees and personal representatives administering the estates of the deceased could feel the full brunt of the rise as gains made will be at risk of exposure to the new higher rate, warns the Law Society.
The new rate of 28 percent will charge any gains made while the estate is being administered, and also gains for the duration of a trust.
Will trusts, created by parents of young children or vulnerable adults, are particularly exposed to the new regime, says the Law Society
Law Society President Robert Heslett says:
“Many hardworking families will often look to create a protective tax regime for their children in the event that they are orphaned at a young age by leaving assets in trust until the children are old enough to manage the assets without the guiding hand of their parents.
“There is a real danger of trust assets being eroded through a combination of income tax at 50 per cent, CGT at 28 per cent and the impact of the changes to the inheritance regime introduced in 2006.
“Personal representatives, trustees and anyone else appointed to set up a trust and settle assets within it should urgently seek advice from their solicitor to ensure that arrangements are structured as tax efficiently as possible for the benefit of these vulnerable beneficiaries in the light of these new developments.”
Tread carefully
The Law Society and its members are urging trustees and those charged with the task of administering an estate to tread carefully when reviewing trusts or practices in light of the new CGT rate.
Law Society President Robert Heslett adds:
“This reinforces the importance of using a solicitor instead of an unqualified, unregulated will writer for trust or probate matters. In light of this new tax regime and the complications that come with it, do you really want an unqualified, unregulated executor or trustee administering your estate after you pass away, rather than a solicitor who is professional, robustly regulated, qualified and insured?
“Even where a solicitor has not been appointed to administer a trust or estate, anyone who has been given that role should go to a solicitor, who is best placed to take all these issues into account.”
If you do not have a will and need a solicitor write one, use the Law Society Find a Solicitor facility on the Law Society website at www.lawsociety.org.uk
Ends
Notes to editors:
The advice comes as part of the Law Society’s nationwide YOUR SOLICITOR, QUALIFIED TO ANSWER campaign, which takes a Beatles theme with the strap-line ‘Help, I need somebody’. It is currently featured in the national press, on trams, metros, railway stations, buses, on taxis, at televised cricket matches and online, with over 380 million opportunities to see.
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