Feeling a bit foggy after the holiday break? It’s time to get back up to speed with the latest trust and estate developments. Welcome to the wrap-up of the top ten most popular stories in STEP’s online UK Digests throughout December as clicked by our readers.
Draft legislation to block multiple-trust IHT planning: The government has published new legislation to deter inheritance tax mitigation through the use of multiple trusts, and to simplify the periodic IHT charges imposed on relevant property trusts.
Single settlement nil-rate band proposal dropped in Autumn Statement: The Treasury has abandoned its plan to introduce a single inheritance tax (IHT) nil-rate band to be divided among all of an individual settlor’s trusts. Instead it will introduce new targeted rules to prevent the use of multiple trusts to avoid inheritance tax.
Gifting home into ‘asset protection trust’ was a tax disaster: Practitioners discuss a case in which a married couple each placed their share of the matrimonial home in a so-called asset protection trust, to protect it from means-testing for local authority care home fees. HM Revenue and Customs now says the parties have used up most of their nil-rate bands creating the trust, which is in any case ineffective for inheritance tax purposes.
High Court dismisses MCA as test for testamentary capacity: The recent England and Wales High Court case of Walker v Badmin establishes that the long-held Banks v Goodfellow test for testamentary capacity overrides the capacity test set out in the Mental Capacity Act 2005. However, some practitioners still want to see the matter confirmed by appeal to a higher court.
Court agrees to reverse mistake that triggered big CGT bill: The England and Wales High Court has agreed to set aside a clause in a trust deed that accidentally created a GBP650,000 capital gains tax liability (Kennedy v Kennedy, 2014 EWHC 4129 Ch).
How to decide whether to challenge a will: An expert at New Square Chambers examines the issues charities face when deciding whether to litigate over a legacy or residuary gift contained in a will. He looks at a number of recent cases where the charity got it wrong – notably the RSPCA in the Sharp case, and the Woodland Trust in the more recent case of Loring.
Beware of these bogus HMRC documents: HM Revenue and Customs has published some examples of the highly ingenious bogus emails, websites letters, text messages, and phone calls used by fraudsters to steal taxpayers’ personal information.
Supreme Court considers long-divorced wife’s claim on husband’s business assets: This week the UK Supreme Court will hear Kathleen Wyatt’s appeal for financial remedy against her ex-husband. When they divorced 22 years ago, the couple had neither assets nor income. Dale Vince later started a wind power business that made him rich.
Deceased’s ISA benefits can be passed to surviving spouse: The rules on individual savings accounts are changing to allow a spouse to inherit their deceased partner’s ISA-related income tax and capital gains tax benefits via an additional ISA allowance. The surviving partner will be able to save as much into their own ISA as their spouse used to have, in addition to their normal annual ISA limit, with effect from 6 April 2014. Also, people who die before age 75 with a joint life or guaranteed term annuity can now pass on the benefit tax-free, and from 6 April 2015 the 55 per cent special charge on pension funds at death is abolished.
Autumn statement preview: The Chancellor’s annual Autumn Statement will be published on Wednesday, 3 December. In addition to tax measures already consulted upon, there are predictions on various (unannounced) measures, including: increased council tax bands for higher-value properties; the abolition of higher-rate tax relief on pension contributions; a lifetime cap on ISA investments; and an increase of the IHT nil-rate band to GBP1 million per couple.
The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.
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