Book review: ‘Financial Planning with Trusts 2015-16’ by John Woolley
A Claritax Books publication ISBN 978-1-908545-66-4
We reviewed the 2014/15 edition which aimed to be a “practical guide to the appropriate use of trusts for financial planning and asset protection” and this edition is no different. It is part of a range of books written about tax and other financial matters designed to achieve clarity in complex situations.
It is the fate of all books written about tax that it is out of date as soon as it has been written but this is not a criticism since this edition has been updated to cover the changes in Pensions and Care and anticipates, as far as it can, the progress of taxation just as the Summer Budget 2015 was being announced.
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It is easy to direct you to the purpose of this book as it is clearly stated on page 1:“It is designed to give specific and practical help to advisers who feel that a trust may be appropriate for a client but wish to know more about the full implications, advantages and potential disadvantages of using a particular type of trust as part of financial planning for a family.”
Whilst not suggesting a trust is appropriate in all cases, particularly as to-day the larger estate is looking towards family partnerships or family investment companies to avoid the increased rates of tax affecting trusts, this book considers how trusts may help with planning for capital gains tax and income tax not just inheritance tax.
Given the author’s experience of working with the financial services sector for over 30 years it looks at some of the special trust arrangements used in that sector.
Despite increased concern about tax avoidance, clients still seek estate planning or financial planning advice so it looks at how different types of trust can be effective in meeting a client’s financial objectives.
Structure & Layout
The book is organised over 29 chapters and states the law as at 8 July 2015 – the date of our Summer Budget 2015.
Chapters 2 – 4 provide some simple background as to why trusts are used, their categorisation and some fundamental points such as what powers do the trustees hold.
Chapter 5 provides a general overview of the taxation of trusts and includes some examples of the changes to the relevant property regime based on the 10 December 2014 draft Finance Bill.
Chapter 6 provides a useful commentary on the taxation of single premium bonds which are held in trust and reminds us of the need to think ahead about encashment. One might also read at the same time chapter 9 on lump sum IHT plans and chapter 10 on trusts of life assurance protection plans to gain a good range of tips relating to insurance products.
Chapter 8 looks at lifetime IHT planning with cash and investments as opposed to trusts for business protection which is included in chapter 11 and trusts relating to shares in a family trading company which appears in chapter 16.
Trusts which might apply on death are covered in various chapters – the topical changes to the treatment of death benefits under registered pension schemes appears in chapter 12; with trusts in Wills in chapter 13 and trusts used with Deeds of Variation in chapter 14. Linked to the question of death might be the chapter on trusts to avoid probate in chapter 19.
The book addresses the impact of IHT when the trust may be made by a non-domiciled person – chapter 17 on excluded property trusts or where the trust itself is offshore and English law is not the applicable law (chapter 18).
I hate the term ‘asset protection trust’ so I am delighted that chapter 20 talks about trusts as a means of protecting assets instead. This chapter is followed by a common reason people seek such trusts as chapter 21 covers the topic of trusts to reduce the costs of care. This chapter has been updated to cover the effect of the Care Act 2014 and its accompanying Regulations although it was written before the Government announced it was to postpone the coming into effect of the cap on care until 1 April 2020.
Trusts are also used for specific purposes and whilst employee related trusts are not part of this book’s remit, nor are charitable trusts, there are chapters on personal injury trusts (chapter 22) and trusts for the disabled and vulnerable (chapter 23).
The use of trusts to avoid the payment of tax has been on the Government’s agenda for some time and therefore the discussion on the application of the General Anti-Avoidance Rule to trusts in chapter 25 is welcome. Since the US too also wants to ensure it gathers all their rightful taxes from trusts there is a chapter on the impact of FATCA on trusts (chapter 28).
Trusts in administration need to liaise with HMRC and have their administrator’s costs met so we can turn to chapter 26 on dealing with HMRC and chapter 27 on facilitating adviser charging to guide us through.
Chapter 29 provides a handy glossary of trust terms.
Throughout the book there are worked examples, diagrams and cross references to relevant legislation which all help to make it a first port of call when undertaking research as a way into a problem.
Clarity & readability
John Woolley combines his experience and his skill to provide a clear read on what are complex issues.
Relevance to practitioners
This book is highly relevant to any practitioner providing trust and tax advice to clients.
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