A&M trust post the changes in 06//08

I have a question regarding an Accumulation & Maintenance trust created in 1999.

Principal beneficiaries:

  1. “the two present grandchildren of the Settlor being A & B”
  2. All further grandchildren of the Settlor born in the future other than any born after the first to occur of the following:

a. The date on which A attains 18 years of age; or
b. Expiry of the Accumulation period

This class is now closed as A turned 18 on 11th May 2016. Accumulation period ends on 2nd November 2020.

S31 and s32 apply with the usual modifications. Income payable to the beneficiaries upon the earlier of them attaining 25 or end of the Perpetuity period (79 years from date of trust).

The only change to trust appears to be a change of trustees in 2014. There does not seem to be any attempt to amend the trust following the changes in 2006/2008!

There is also a distinct lack of HMRC correspondence…

Does anyone know whether the changes to A&M trusts in 2006/2008 required the trustees to do anything and if so, can this be done retrospectively?

Also by default would the trust have converted to being a discretionary trust or bare trust?

Many thanks,

There were transitionary provisions which allowed A&M rules to continue to apply if the absolute vesting was brought forward to 18 before 2008.

Assuming this was not done, I believe the trust fund would have become relevant property and subject to potential anniversary / exit charges.

Is it possible that the value fell under all the thresholds and therefore no action was necessary?

Andrew Goodman
Osborne Clarke LLP

On the basis that no action was taken by the trustees in the 2006/2008 window, the trust is subject to the IHT relevant property regime.

The trustees would have needed to act to prevent the default position applying, and the relative provisions cannot be invoked retrospectively.

Whilst the trust is subject to the IHT relevant property regime, this does not change the beneficial interests, which remain as set out in the trust instrument.

Paul Saunders

Thank you Andrew and Paul, that was very helpful.

Do you know, would the 10 year anniversary charges be calculated from trust creation, 2006 law change or end of the transition period in 2008?


The due date for periodic charges will be calculated from the date the trust was first constituted (usually accepted as the date of the trust instrument), with a proportionate charge from 6 April 2008 for the first periodic charge due after that date.

Paul Saunders

The trust will have become relevant property on 6 April 2008. The next ten year anniversary charge after this date will be based on the value at the ten year anniversary, with rate relief for the number of quarters for the period to April 2008.

Graham Barry
New Quadrant Partners Ltd

Thank you Paul and Graham, really helpful!

Andrew James
Red Kite Law LLP