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Broken promise

Peter Legg (Money Marketing, last week) brought back memories of my schooldays trying to cram the poetry of Alexander Pope.

“A little learning is a dangerous thing; drink deep or taste not the Pierian spring: there shallow draughts intoxicate the brain, and drinking largely sobers us again.”

Peter forecasts the end of standard tax avoidance options, including poten-tially exempt transfers, and then advocates trusts as “the perfect, flexible solution for estate planning”. If the use of trusts is not a standard tax-avoidance option, then I do not know what is. Why are trusts effective in inheritance tax planning? Because a gift to trust is a transfer, either potentially exempt or chargeable. Abolition of the potentially exempt transfer would therefore hit trust-based planning.

However, the statement: “Critically, a trust can be broken at any time, providing the flexibility required for an evolving estate planning strategy” caused me most concern. It is comments like this which prevent advisers gaining and maintaining the respect of their fellow professionals – solicitors and accountants. Trusts cannot be broken at any time. There may be occasions when the effect of a transfer to trust can be negated but these will be few and far between. Trusts establish legal entitlements and beneficiaries who lose out in trust-busting exercises, successful or otherwise, may well be tempted to sue the trustees and their advisers.

Peter’s final paragraph encapsulates a sensible approach to estate planning. It must surely follow from his remarks that the perfect solution does not exist. Let us examine all the options available and determine which one (or more) meets the client’s needs.

Gerry BrownTechnical manager,

Scottish Life International,



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