Welcome to the first Tax & Trusts newsletter!

For some time we have wanted to produce a periodical newsletter on topical tax and trust issues as a way of letting our professional colleagues and clients know how we are responding to changes in law and practice in the private client field. Time of course is the great enemy but we have now bitten the bullet and this is the first issue. If you have (constructive!) comments on the newsletter the Editor would be delighted to know.

In this issue we're covering a wide range of issues where recent case law and legislation have created significant changes that could affect you.

Take a look at the summaries below or use these links to view these stories in full:

• Agricultural property relief  – will your farmhouse qualify?
• Asset Protection on Divorce
• UK tax residence – has HMRC's "normal practice" been resumed?
• Whither A&M Settlements?
• Enduring Powers of Attorney (EPAs) – not for much longer

If you need further information or advice on any of these issues, please do get in contact.

Case Round Up

Antrobus, Antrobus 2 and McKenna – Agricultural property relief – will your farmhouse qualify?

Agricultural property relief (APR) from inheritance tax (IHT) is potentially extremely valuable, particularly for those who qualify for 100% relief. However, recent case law suggests that 100% relief on most farmhouses is a thing of the past and that many may not qualify for any relief at all. Learn more how this may affect you.

White v White – Asset Protection on Divorce

"It is a truth universally acknowledged that a man in possession of a good fortune must be in want of a wife". Contrast the opening sentence of Pride and Prejudice with this from James Turner QC in the Sunday Times: "If you are a wealthy man or are likely to receive wealth in the future, you would be absolutely bonkers to get married from a financial point of view". Different times, different values – and different matrimonial laws.
Discover the ongoing impact of White -v- White.

Gaines-Cooper v HMRC – UK tax residence – has HMRC’s "normal practice" been resumed?

"Residence" is one of the key principles in tax management but its meaning is not defined by legislation but from decisions of the Courts.  Perhaps the best known of HMRC's "rules" is the "91-day test" – the time allowed to be spent in the UK by overseas residents before taxation. For the purpose of counting the days spent in the UK HMRC's "normal rule" is that days of arrival in, and departure from, the UK are ignored.  However, the case of Gaines-Cooper v HMRC refines that view. Read more.

Legislation

Whither A&M Settlements?

Before the Finance Act ("FA") 2006, an Accumulation and Maintenance (“A&M”) settlement was broadly speaking treated as exempt from IHT until the beneficiary reached the age of 25. If the assets remained held in trust after that time the settlement was converted to a life interest trust and generally speaking IHT then became payable on, but not before, the death of the life tenant.

In general terms, the effect of FA 2006 is to bring A&M settlements, at the end of a transitional period (6 April 2008), into a very different IHT charging regime.
Discover what this could mean for you.

Enduring Powers of Attorney (EPAs) – not for much longer

For more than 20 years an EPA has been the means by which it has been possible to appoint a person, usually a family member, to look after one's money, investments and property should one become mentally incapable.

To address these and other issues the Mental Capacity Act 2005 introduces a new document known as a Lasting Power of Attorney (LPA). LPAs are scheduled to be available from 1 October 2007 and from that date it will not be possible to make an EPA.
Discover the impact of this new legislation.