Overview
The client gifts money to a trust and receives regular fixed capital payments for the whole of their life or until the fund runs out – discretion to change beneficiaries.
Quick facts
- For use with the Collective Investment Bond.
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This is a trust which your client, the settlor, creates by means of a gift, but under the terms of which they retain the right to receive certain ‘income’ payments.
- These payments may continue for the whole of their life, or until the fund has been exhausted.
- Depending on the age and health of the settlor, and the amount of income required, there may be an immediate saving for inheritance tax (IHT).
- The settlor chooses their trustees. They can also appoint themselves as a trustee.
- After the death of the settlor (or both settlors where there are two), the trustees can distribute any remaining trust assets to the beneficiaries.
- Classes of beneficiary are defined within the deed; for example, ‘children and descendants of the settlor’. Beneficiaries not covered by the classes can be added to the trust by the settlor.
Deeper dive
Not all discounted gift trusts are the same.
Watch this spotlight session for a deeper dive on how this trust works and how you can master its flexibility.
Suitability
Technical support
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IHT planning and a discounted gift trust - This article provides information about inheritance tax planning for UK-domiciled individuals, where a gift has been made and the individual still requires access to withdrawals.