{"id":426224,"date":"2026-01-22T16:52:16","date_gmt":"2026-01-22T16:52:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/426224\/"},"modified":"2026-01-22T16:52:16","modified_gmt":"2026-01-22T16:52:16","slug":"why-more-families-are-setting-up-trusts-ahead-of-inheritance-tax-changes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/426224\/","title":{"rendered":"Why more families are setting up trusts ahead of inheritance tax changes"},"content":{"rendered":"

\n\t\t\t\t\tAdvisers have said that clients are looking to protect their wealth and mitigate tax liabilities before changes are set to come in this April\t\t\t\t\t <\/p>\n

There has been an increase in families setting up trusts ahead of major inheritance tax (IHT) changes<\/a> due this year with experts saying they have seen a surge in enquiries.<\/p>\n

Trusts are legal arrangements that allow someone to pass assets \u2013 such as money, shares or property<\/a> \u2013 to someone else so they can look after them for the benefit of others such as children.<\/p>\n

They are commonly used to control how wealth is passed on and, in some cases, to reduce the amount of IHT<\/a> that will eventually be paid.<\/p>\n

Figures from wealth management firm Evelyn Partners show that trust registrations rose sharply in the 2024\/25 tax year, with newly registered trusts accounting for 14.5 per cent of all trusts in existence.<\/p>\n

Following the Budget, Pareto Financial Planning also said it has seen a 30 per cent increase in enquiries about how trusts can potentially assist as a solution to help mitigate the pressures of IHT.<\/p>\n

Stuart Carswell, director at the firm, said: \u201cClients are becoming increasingly concerned about recent changes to IHT.\u201d<\/p>\n

The increase in trust planning is being driven by a combination of frozen tax thresholds and upcoming changes to business relief (BR) and agricultural property relief (APR). <\/p>\n

These reliefs currently allow qualifying business and farm assets to be passed on with little or no IHT but from April, the 100 per cent rate of relief for APR and BPR will only apply to the first \u00a32.5m of combined property assets.<\/p>\n

Any assets exceeding this will qualify for 50 per cent relief instead of 100 per cent, resulting in an effective 20 per cent IHT charge on the remaining value.<\/p>\n

Another reason for the rise is linked to deadlines introduced under anti-money laundering rules<\/a>, which require more trusts to be formally registered.<\/p>\n

Advisers say this has prompted many families to take a wider look at their estate planning.<\/p>\n

David Stirling, director of Mint Wealth, said the deadline has acted as a \u201cwake-up call\u201d for clients.<\/p>\n

He said: \u201cIn many cases, clients are using this as an opportunity to review trusts that haven\u2019t been looked at for years, or to set up new ones where plans were never properly formalised.<\/p>\n

\u201cRather than leaving things until the last minute, people are engaging earlier and making more considered decisions.\u201d<\/p>\n

Zo\u00eb Dagless, director of Meliora Financial Planning, added that people are \u201cincreasingly interested\u201d in trusts as many are unsure where to turn to preserve and pass on assets to future generations.<\/p>\n

She worries there are still many who remain unaware that any action is required in relation to some trusts.<\/p>\n

Alex Race, chartered financial planner at Rathbones, said: \u201cThere has been increased chatter around trusts and broader estate\u2011planning strategies in the run\u2011up to last year\u2019s Budget, driven by concerns that the current gifting regime might be scrapped, the seven\u2011year rule extended or a new annual gift allowance introduced whereby recipients would pay income tax on amounts received.<\/p>\n

\u201cDiscussion has also intensified since the announcement that pensions will be brought into IHT calculations from April 2027.\u201d<\/p>\n

What is changing \u2013 and why it matters<\/p>\n

From this spring, the most generous IHT treatment for business and agricultural assets will be capped.<\/p>\n

Currently, qualifying assets can usually be passed on free of IHT thanks to 100 per cent business relief or agricultural property relief. <\/p>\n

But as of 6 April 2026, that full relief will apply only to the first \u00a32.5m of qualifying assets.<\/p>\n

Anything above that threshold will receive only 50 per cent relief, meaning half the value will be subject to IHT. At the standard IHT rate of 40 per cent, this creates an effective tax rate of 20 per cent on the excess.<\/p>\n

Unused relief can still be transferred to a surviving spouse or civil partner, but estates that exceed the new limit could face a significant and immediate tax bill.<\/p>\n

Rachael Griffin, tax and financial planning expert at Quilter, said this explains why more families are turning to trusts.<\/p>\n

She said: \u201cPeople want clarity and control over what happens to their wealth.<\/p>\n

\u201cFrozen IHT thresholds, combined with changes to business relief, agricultural relief and the future treatment of pensions, are forcing families to rethink how their estates are structured.\u201d<\/p>\n

Why trusts are back in focus<\/p>\n

For business owners and farmers, the changes are particularly significant as many hold valuable assets on paper but have limited cash available to pay a tax bill.<\/p>\n

If an estate exceeds the new relief limits, heirs may be forced to sell part of a business or land simply to pay the IHT.<\/p>\n

Lee Matthews, senior partner at Evelyn Partners, warned that delays could be costly.<\/p>\n

He explained: \u201cA large and unexpected IHT bill could threaten even a successful family business.\u201d<\/p>\n

Trusts can help manage this risk by moving assets out of an individual\u2019s estate during their lifetime, spreading value between family members or ensuring assets pass in a controlled way that aligns with available reliefs.<\/p>\n

As a result, advisers are urging families and business owners to act now. <\/p>\n

Typical steps include identifying which assets qualify for relief, reviewing gifting strategies, restructuring shareholdings, arranging life insurance to cover potential tax bills and making sure legal, tax and financial advice is fully aligned.<\/p>\n

Tips for families and business owners<\/p>\n

Here are some practical steps Matthews recommends to help protect wealth, reduce IHT exposure and make sure trusts and estate plans are up to date:<\/p>\n

Review existing trusts to ensure they remain compliant and fit current goals<\/p>\n

Act before deadlines to avoid last-minute tax exposure<\/p>\n

Map assets to understand which qualify for relief<\/p>\n

Consider gifting into trusts before deadlines to maximise relief<\/p>\n

Use life insurance to bridge potential IHT gaps<\/p>\n

Align corporate restructuring with personal estate planning<\/p>\n

Work closely with advisers for integrated guidance<\/p>\n","protected":false},"excerpt":{"rendered":"Advisers have said that clients are looking to protect their wealth and mitigate tax liabilities before changes are…\n","protected":false},"author":2,"featured_media":426225,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,27382,1829,131,132],"class_list":{"0":"post-426224","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-finance","12":"tag-inheritance-tax","13":"tag-investing","14":"tag-personal-finance","15":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/426224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=426224"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/426224\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/426225"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=426224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=426224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=426224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}