Section 71D applies to a trust created on any date if it is a trust for the benefit of a person under the age of 25 (B) and:
At least one of B's parents has died.
The trust was created:
under the will (www.practicallaw.com/4-382-6317) of a deceased parent (including a step-parent or someone who had parental responsibility (www.practicallaw.com/6-382-5741) for B immediately before their death (section 71H, IHTA 1984));
under the Criminal Injuries Compensation Scheme; or
(with effect from 8 April 2010) under the Victims of Overseas Terrorism Compensation Scheme.
It meets the conditions in section 71D(6), which are that:
B will become entitled to the whole of the trust capital, income and any accumulated income on or before reaching 25;
while B is living and under 25, any capital applied for the benefit of a beneficiary is applied for B's benefit; and
while B is living and under 25, either B is entitled to all of the income (if any) or no income may be applied for anyone else's benefit.
Between 22 March 2006 and 5 April 2008 inclusive or when the amendments made to section 71 of IHTA 1984 by the Finance Act 2006 came into force on 6 April 2008, the trust ceased to qualify as an accumulation and maintenance trust (www.practicallaw.com/9-107-5820) (A&M trust) under section 71 but the assets continued to be settled property (as defined in section 43 of IHTA 1984).
Since the trust ceased to qualify as an A&M trust:
the assets have been held on trust for the benefit of a person under the age of 25 (B); and
the trust has met the conditions in section 71D(6) listed above.
A trust is not prevented from qualifying as an 18 to 25 trust solely because the trustees have the power of advancement (www.practicallaw.com/8-382-6103) in section 32 of the Trustee Act 1925 (or an express power with the same effect), even if the power is extended to apply to the whole of the trust capital (section 71D(7), IHTA 1984).
Trusts that qualify as trusts for bereaved minors (www.practicallaw.com/1-382-6328), A&M trusts under section 71 of IHTA 1984 (as amended by the Finance Act 2006) or qualifying interest in possession (www.practicallaw.com/3-382-5969) trusts cannot be 18 to 25 trusts (section 71D(5), IHTA 1984).
For information about how 18 to 25 trusts are taxed, see Practice note, Taxation of UK trusts: overview (www.practicallaw.com/0-383-6634).
For a will clause creating an 18 to 25 trust, see Standard document, Master will with drafting notes: clause 19 (www.practicallaw.com/5-381-4187).