Age 18-to-25and Trusts for Bereaved Minors (TBMS) are relatively new having been introduced by the Finance Act 2006. They can only be set up on the death of a parent (including a step parent) for a minor child.
All trusts created for a minor child on the intestacy of a parent will be Trusts For Bereaved Minors (TBMs), whilst a will may create a Trusts For Bereaved Minors (TBMs) or an Age 18-to-25 Trust.
The following rules apply:
Under aFor Bereaved Minors (TBMs) the beneficiary must become absolutely entitled to the assets at the age of 18.
Under an Age 18-to-25 Trust, thecan continue beyond the age of 18 as long as the beneficiary becomes aboloutely entitled to the assets by the age of 25.
For Bereaved Minors (TBMs) are not subject to the discretionary charging regime.
Age 18-to-25 Trusts only become subject to the discretionary trust charging regime in respect of payments out of theafter the age of 18. There are no entry or perodic charges to Inheritance Tax (IHT).
Existing Accumulation And Maintence Trusts (A&M Truts) will have the same tax treatment as Age 18-to-25 Trusts as long as thewas amended before 6th April 2008 to include an absolute entitlement by age 25.