Grandchildren can still benefit from long-term trusts

I am thinking of setting up a long term trust for the secure benefit of my grandchildren, but I hear that trusts are coming under attack from the tax authorities and are also subject to increasing and burdensome regulation. Should I proceed, or is it just not worth it? TRUSTS are unique to UK legal jurisdictions and, with tightening worldwide financial regulations, not universally understood.

It is true that in the past they had many tax benefits (and still do have some) and so have been used to avoid tax. Hence HMRC has been steadily reducing these tax breaks in recent years.

This is coupled with extra administrative requirements including a need to register all trusts with HMRC online by next February and also the need to have a ‘Legal Entity Identifier’ to make investments. If these are in US assets, there are fur- ther requirements still.

Most of the income tax advantages have been negated, although there are still some for trusts set up for grandchildren who may have no other taxable income whilst still in education. Some of the continuing tax advantages on large estates have been highlighted in recent reports of the Grosvenor Estates Inheritance tax liability and that area may well come under some scrutiny. However old fashioned the concept of trusts may seem, they do still have very real practical purposes, aside from the tax advantages or disadvantages.

The increasing fragility of family life makes them a much more secure way of providing protection and benefit to grandchildren and are still a useful tool in any kind of inheritance planning.

Despite the irritations of extra regulations, they are well worth considering – but professional help in the early stages is now essential.