Don't forget about estate planning
Did you set up a trust before 22 March 2006? If so, it may well have been effected by inheritance tax (IHT) changes introduced in last year's budget.
At the time, the Chancellor's proposals created considerable controversy, not least because they went unmentioned in his Budget speech. Mr Brown's original ideas were tempered after much lobbying, and one of the many consequences was a set of special transaction rules that apply until April 2008. These apply primarily to power of appointment trusts, and accumulation and maintenance (A&M) trusts.
The the case of power of appointment trusts, you should review the existing beneficiaries and make any changes before April 2008 to avoid being caught up by the new rules. For A&M trusts, you need to decide whether to vay the age at which capital and income entitlements begin, probably bringing them together. If the beneficiaries do not become fully entitled to all the trust's assets by age 18, there could be subsequent IHT charges.
While the Government has made life harder for trusts, it has eased the burden for some married couples and civil partners. The Chancellor announced in the October Pre-Budget Report that the nil rate band, currently £300,000 would become transferable between spouses and civil partners.
So, for example, if you die first and leave everything to your spouse, their nil rate band will be doubled. This is good news if you are unable - or unwilling - to pass assets away from your spouse on first death. However, if you have built first death bequests into your will to make use of the nil rate band, the latest changes make little difference to your joint IHT liability.
Amidst a great deal of recent speculation about IHT in the political arena, it may be tempting to give up IHT planning in the hope that the problem will disappear. But that is not a very safe approach and as a general rule, the earlier you start planning the better. The Financial Services Authority does not regulate taxation and trust advice.