If I have an existing trust, do I need to do anything about it?

Yes you do. You have until 6th April 2008 to make a decision on any existing trusts. 

Accumulation and maintenance trusts are affected. If you have such a trust you won't need to make any changes as long as the beneficiaries become absolutely entitled to the proceeds of the trust at age eighteen. If they aren't, you are allowed to vary the trust pre 6th April 2008 to ensure this happens. If you don't, the trust will fall into the new regime and all the periodic and exit charges that go with it. There is also an option to simply wind the trust up now.

There are a few exceptions to this where the new proposals to trusts will not apply. Trusts for bereaved minors, trusts created on death which give an immediate interest in possession and trusts created for the benefit of a disabled person.

The revenue has also pointed to a change in the current reporting thresholds. Currently when you make a chargeable lifetime transfer you have to complete an IHT100 form. This is applicable where a gift is in excess of £10,000 or total gifts in the ten years are in excess of £40,000. This is a ridiculous level and is expected to be increased to £200,000. Although the revenue has said they are happy to do this, they have not taken numerous opportunities to put it in place.

Finally if you want to make any changes to any life insurance policies ensure they are within the 'allowable variations'. If they are not and a pre 22nd March 2006 policy is varied, the whole policy, not just the increased amount, will become relevant property and subject to the new regime. As you can see, it's a complicated subject to seek advice from your Solicitor and Independent Financial Adviser. 

Other Inheritance Tax frequently asked questions:

How much is my estate worth for Inheritance Tax?

How soon will Inheritance Tax have to be paid?

What Inheritance Tax planning exemptions do I have?

What is a potentially exempt transfer?

Will all my gifts be effective for UK Inheritance Tax?

If I am making gifts or gifts into trusts which order should I do them in? 

If I have an existing trust, do I need to do anything about it ?

If I made an outright gift of over the nil rate band, would I pay any immediate inheritance tax?