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Pilot Trusts

These are trusts created during a person’s lifetime with a nominal sum (usually £10) into which, at some point in the future, further cash or property will be added.

These additions are typically:

  • Lump-sum death in service payments;
  • Legacies in a Will; or
  • Pension lump-sums.

The effect is that each Pilot Trust has the benefit of its own full nil-rate band (currently £325,000) to set against future inheritance tax charges.

The end of the road for Pilot Trusts?
HMRC intend to limit the advantages of multiple Pilot Trusts and in relation to taxable events arising after the date of Royal Assent to Finance Bill 2015 (expected to be the end of October 2015) the value of the property/cash added to the Pilot Trust must be included in any trust tax calculation together with the initial value of the assets in the other trusts.

If you have already created a Pilot Trust or are considering making a request that lump sum death benefits or property/cash in your estate, on your death is paid into a Pilot Trust you should seek legal advice with regard to the implications of these changes.

Contact Sarah Hodkinson who will be happy to go through the details and provide further assistance. 

About the Author

Sarah Hodkinson

Director

Sarah has been qualified as a solicitor for over 20 years and has spent her entire career in Yorkshire.…

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