The Government abolished gift duty on 1 October 2011. For the unwitting, this may create the mistaken impression that there can be a wholesale movement of assets into a trust, less documentation is required and legal and accounting fees can be avoided.
However, such action would be a potential mistake. The abolition of gift duty is just that- there is no longer any duty payable. However, asset transfer still needs to be correctly documented and there needs to be proof that the assets in the trust are correctly administered as assets separate from those of the settler(s). In fact, many professionals in this area argue that it will be more important than ever to ensure that trust documentation is properly maintained, especially if one wishes to have protection in the future from potential attackers of the trust. This new legislation has created some opportunities and it is recommended trust settlors and trustees seek professional legal advice especially relating to:
- The opportunity to transfer assets directly into a trust without having to go through a lengthy gifting programme.
- How best to operate your finances to ensure that your trust is managed as a separate entity and not simply as personal assets.
- The opportunity to rearrange your trust to update old tired documentation, with minimum impact.
- Review any debt structuring your trust has to ensure it is appropriate under a new regime.
- Further advances to your trust still need to be recorded in deeds of gift or else they will be deemed to be loans to your trust.