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Changes to Finance Bill 2013 may lead thousands of parents to rewrite their wills to protect their children’s interest

Date: (13 February 2013)    |    

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The Law Society has written to the government advising them of the consequences of their proposals to make changes to the Finance Bill 2013 which experts say may lead to thousands of parents having to rewrite their wills to protect their children’s interests.
The unintended consequence of the government’s Finance Bill affect trusts set up to provide for their children, in the event of them being orphaned. The changes mean the trustees who manage the trust assets for the child or other beneficiary might not be able to for example acquire a home for the beneficiary or meet education or maintenance costs without the involvement of the courts costing the trusts thousands of pounds in legal costs.
Lucy Scott Moncrieff president of Law Society said that the government’s intentions might not be to penalise orphaned children or to require a significant number of parents to redraft their wills to protect their children’s futures. Legislations could give rise to some unintended consequences and its fortunate thing that expert probate solicitor members under their watchful eyes and diligence give the government the opportunity to put this right before it creates injustice, confusion and confusion and unforeseen expense.
Section 32 of the Trustee Act 1925 is the provision which gives the trustee the power to distribute trust assets for the benefit of a beneficiary. This section enables trustees to distribute trust assets or manage capital in the interests of the beneficiary, without expensive and time consuming involvement of the courts. The new changes, for property transferred into settlement on or after 8 April 2013, the Section 32 power will have to be excluded or restricted or else the trust will not qualify as a bereaved minors' trust (BMT) or 18-25 trust.
The government's proposed amendments are intended to have effect in relation to property transferred on or after 8 April 2013. However, any will which provided for a BMT and 18-25 trust which have not taken effect (as the testator has not yet died) will be affected, as property will be transferred into the trust only on death which could be after 8 April 2013.
The effect of the changes is certain testators who wish their funds to enter the tax advantaged BMT and 18-25 regimes will have to rewrite their wills. The proposed change will have a wide ranging and adverse effect on many wills, past and future, and will have costly implications for many members of the public.
The Law Society has reported its concerns to HMRC as part of the government's consultation on the proposed changes to the Finance Bill 2013, which is due to be finalised at the end of next month.
Given the widespread effect, the Law Society is urging HMRC to reconsider the proposed amendments to delete the Section 32 disregard.

 

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Duncan Lewis Blog - Posted By: on 13 July 2011 at 16:26

Good to see that Duncan Lewis are ensuring their staff are being trained to a high standard.