Tax benefits
A Vulnerable Person's Trust (VPT) receives special tax treatment compared to other types of trusts. This preferential treatment applies to various taxes:
- Inheritance Tax (IHT): There may be IHT advantages when setting up the trust or adding assets to it.
- Income Tax: The trust's income is taxed at the vulnerable beneficiary's personal tax rate, which is often lower than the rate applied to standard trusts.
- Capital Gains Tax (CGT): The trust benefits from the vulnerable beneficiary's annual CGT exemption, which can result in lower CGT liabilities.
To qualify for these tax benefits, the trust must meet specific criteria set by HMRC, including strict rules about who can be classified as a vulnerable beneficiary and how the trust's assets are used. These benefits are not automatic and must be claimed annually.
These rules ensure that the tax advantages are only available to trusts genuinely set up to benefit vulnerable individuals.
Sometimes others can benefit from the trust without it affecting the trust’s unique position. There is a limit to this, however, as the trust must mainly be for the benefit of the disabled or vulnerable person. You must be careful that other, non-vulnerable beneficiaries don’t receive too much from the trust income or capital because then the trust is no longer eligible for the tax benefits afforded to a VPT.
Why Choose Us?
At Rowlinsons, we understand that you and your loved one’s needs are unique which is why we take the time to understand your situation. We’re committed to offering high-quality legal advice so you can create the most effective trust for you.
Our Wills, Trust and Estates team have extensive experience advising clients on the use of trusts. If you’re responsible for someone with a disability we can help you put in place measures to manage their financial needs even if something happens to you.
We’ll be by your side to ensure that you achieve your goals, giving you peace of mind that the people you want to protect are taken care of.
Contact our Vulnerable Person Trust Solicitors
If you are looking for legal advice to set up a Vulnerable Person Trusts, contact Rowlinsons Solicitors today.
Our team of Trust Solicitors is Cheshire help clients across England and Wales to set up and manage their trusts, as well as with any matters related to Wills, Trusts, and Estate Planning.
Rowlinsons Solicitors was awarded Highly Commended in the Boutique Private Client Team of the Year category at the British Wills and Probate Awards 2023, highlighting our commitment to specialist and tailored legal advice. Our STEP-Accredited team members support clients in Warrington, Widnes, St Helens, Chester, Northwich, North Wales, and across the UK from our offices in Frodsham and Sutton Weaver.
Contact our Vulnerable Person Trusts specialists today to find out how to set up a trust that works for you.
Call us today for an initial no obligation call or click here for a call back. We also have meeting facilities in North Wales by appointment.