News and Events

Discounted gift trusts

I will be at our seminars presenting on discounted gift trusts, which I touched on at our annual investment seminars earlier this year.

“What is a discounted gift trust?” I hear you ask?  Well, a discounted gift trust is an Investment Bond that can be held onshore or offshore, within a trust, and which will pay regular income.  This type of investment allows you to gift a sum of money under a trust whilst receiving an income up to 5% per annum, taking advantage of the 5% tax deferred withdrawal facility under an investment bond.

Subject to the amount of income requested and your health and age, a discount will be offered by the investment company and this discount amount will be deemed to be immediately outside your estate for IHT purposes.  Furthermore, after seven years the balance of the gift, together with any growth on the investment, is also outside your estate for IHT purposes. Withdrawals will continue beyond seven years but it should be noted that, once established, these cannot be stopped or amended.  

Due to the immediate potential IHT benefit and the access to an income from from the investment, discounted gift trusts have been a popular arrangement for many years to help with IHT planning without the individual(s) concerned losing complete access to their money.  
A discounted gift trust may not be suitable for everyone, but assuming you are in good health, likely to live seven years and require an income from your investments, they could be an excellent tool to aid IHT mitigation.  

More details will be available at our seminar, when I will also be running through some case studies.  However, should you wish to discuss this in advance of the seminar or you are unable to attend, please do not hesitate to contact me.