If an American citizen, for example, comes to the UK as a settlor or beneficiary of such a trust, will they be caught in the middle of UK anti-avoidance rules?
The challenge will be to balance the rules for such “ordinary” arrangements, set up in a home jurisdiction for the long term with no regard to UK taxation, with trusts solely designed to fall outside the UK tax net.
We will need to understand the operation of the rules carefully, as well as the interaction with the double tax treaties in place, to establish how such people will be affected, to ensure they remain compliant with UK rules.
In establishing new trusts we will need to have both domestic and international aspects in mind when determining the preferred course of action.
On balance – even if there are changes in the Budget – the trust does, in my view, retain a place in the toolkit of arranging a family’s financial affairs, but it should be used carefully and after full consideration of all the surrounding circumstances, and after answering the question "why?".
Lisa Spearman is a partner at Mercer & Hole