IHTM42801 - Special trusts: summary

Categories 

Types of excluded discretionary trusts known commonly as special trusts (or favoured trusts) are  

  • Temporary charitable trusts 

  • Protective trusts 

  • Trusts for disabled persons  

  • Employee and newspaper trusts  

  • Accumulation and maintenance trusts (A&M) prior to 22 March 2006.  

Other excluded trusts and property within IHTA84/S58 are 

  •  Heritage Maintenance trusts 

  • Pension funds 

  • Trade or professional compensation funds 

  • Asbestos Compensation trusts 

  • Decommissioning Security trusts 

  • Excluded property 

Charges on the trusts 

The common feature of these types of settlement is that they do not contain relevant property, and so are not subject to the ten year anniversary and proportionate charges under IHTA84/S64 and IHT84/S65. However, the property may be subject to a different charge on leaving the trust or where the trust no longer satisfies the conditions for special treatment or where the trustees make an uncommercial disposition that reduces the value of the trust property. 

There is a normal Inheritance Tax (IHT) exit charge (IHTA84/S65) when an existing discretionary trust is converted into one of these special trusts. (IHTM42110)

Two new types of trust were introduced in FA2006 which also have their own IHT charging regime