BONALLACK & BISHOP – SOLICITORS IN SALISBURY –  PRESS RELEASE
November 22nd 2010

Trusts and wills are vulnerable to latest CGT rate, warns Salisbury law firm

The increase in the rate of Capital Gains Tax (CGT) announced by the government in the recent budget mean personal representatives and trustees responsible for administration of the estates of the deceased may feel the full brunt of the tax rise as any gains made will be at risk of being exposed to this new higher rate, warn local lawyers Bonallack and Bishop.

The new 28% rate will be charged both on any gains made while the estate is in administration, and also on gains for the duration of any trust.

Will trusts, often created by the parents of vulnerable adults or young children, are particularly at risk of exposure under the new regime, says Bonallack and Bishop.

Senior partner Tim Bishop, commented:  “Many hardworking families will often look to create a protective tax regime for their children in the event that they are orphaned at a young age by leaving assets in trust until the children are old enough to manage the assets without the guiding hand of their parents.

“There is a real danger of trust assets being eroded through a combination of income tax at 50 per cent, CGT at 28 per cent and the impact of the changes to the inheritance regime introduced in 2006.

“Trustees, personal representatives and anyone else who is appointed to set up a trust and to settle any assets within it needed to urgently take legal advice from their lawyer to make sure that their arrangements are being structured as tax efficiently as possible to benefit these vulnerable beneficiaries in view of the latest changes.”

The Law Society is urging trustees and responsible for the administration of an estate to take particular care when reviewing trusts or existing practices in light of the latest rate of capital gains tax.

Tim Bishop adds: “These latest changes reinforced how important it is to use a specialist solicitor rather than an unregulated and unqualified will writer when dealing with probate or trust matters. Given this new tax regime and the complications it involves, would you really want an unregulated, unqualified, trustee or executor responsible for the administration of your estate when you die, rather than an experienced probate solicitor who is professional, extensively regulated, qualified and fully insured?

“Even in cases where a solicitor was not appointed to administer an estate or trust, anyone who has been given that responsibility should go to a solicitor, who is in the best position to provide advice you can rely on having taken all these issues into account.”

For further information, please contact our wills and probate solicitors on 01722 422300 or via email.