Accumulation and maintenance trust
This term has two meanings:
A narrow, statutory meaning: a trust ( www.practicallaw.com/4-107-7416) that falls within the current definition of accumulation and maintenance (A&M) trusts in section 71 of the Inheritance Act 1984 (IHTA 1984), as amended by the Finance Act 2006 (FA 2006).
A wide, general meaning: a trust with contingent interests ( www.practicallaw.com/9-382-5594) for one or more beneficiaries ( www.practicallaw.com/9-382-5565) under 25 that may or may not meet, or have previously met, the requirements of section 71 of IHTA 1984.
This is because most trusts for children under 25 were designed to fall within section 71 of IHTA 1984 before it was amended by FA 2006. It is no longer possible to create a new trust that falls within section 71 as amended.
A trust meets the current requirements of section 71 if:
The trust was created before 22 March 2006.
The current terms of the trust are that:
one or more beneficiaries becomes entitled to capital at or before the age of 18;
no beneficiary has an interest in possession ( www.practicallaw.com/1-382-5654) ; and
the income is either accumulated ( www.practicallaw.com/7-382-5528) or applied for the maintenance, education or benefit of a beneficiary.
If the terms of the trust were different when it was created:
the current terms have applied since 6 April 2008 or an earlier date; and
the previous terms were within the current definition except that the beneficiaries became entitled to either capital or income at or before the age of 25.
For information about how A&M trusts are taxed, see Practice note, Taxation of UK trusts: overview ( www.practicallaw.com/0-383-6634) .