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22 March 2006 was the day of the 2006 Budget which, without any warning or consultation, made sweeping changes to the IHT treatment of trusts. The date represents a watershed in the IHT treatment of trusts since many of the key changes took immediate effect. To work out the correct IHT treatment of a trust today, it is necessary to look at whether it was made before or after 22 March 2006.

Before 22 March 2006, trusts fell into the following three main categories for IHT purposes:

1. •

   relevant property (RP) trusts, which were usually discretionary trusts

2. •

   interest in possession (IIP) trusts, and

3. •

   accumulation and maintenance (A&M) trusts

On that date, the relevant property regime (RPR) was extended to nearly all new lifetime trusts, whether in discretionary, IIP or A&M format. Similarly, lifetime additions of property to all existing