Read the case study and full article at canadalife . co . uk
INVESTMENTS & PENSIONS
USING DIFFERENT TYPES OF TRUSTS
Using distinct types of trusts at distinct stages of a client ’ s lifecycle will depend on the client ’ s wants and needs , along with what access they require versus how much they can gift outright .
For example , younger clients who have wealth or inherited wealth might not want / be able to afford to make outright gifts to trust . But they know they will have an IHT liability and want to get the growth outside their estate immediately .
A gift and loan trust might be an appropriate solution as the money is loaned , rather than gifted , to the trustees . Clients still have access to the money that ’ s loaned , and the trustees repay the loan over time . The growth on the loaned value is outside the estate from day one and for the benefit of the beneficiaries .
With this type of trust , the donor / settlor has the right to recall their loan in full . They can also waive the right to the loan , making this a gift to the trustees at any time . Taking either of these actions , however , might have tax consequences for the client if this is a discretionary trust .
Recalling the loan could cause a chargeable event , which might trigger income tax charges . If the loan is waived ( turning it into a gift to the trustees ) and its value is over the prevailing nil rate band , entry charges could become payable .
Rysaffe planning works particularly well with gift and loan trusts . This is because the £ 10 gift , which would be a PET or CLT depending on the type of trust the client is using , is usually covered by an exemption .
These loans will remain in the client ’ s estate for IHT purposes , but growth is outside . In five or 10 years ’ time , the client might be in a very different financial position , and they may not need access to all this money . Here , they could waive one of these loans , making it into a gift and discretionary gift trust . Given the value and no previous gifts given , this would mean the gift is within the nil rate band and so no entry charges would be payable .
Trust and estate planning doesn ’ t need to be complicated . There ’ s a solution out there for all of your clients depending on their wants , needs , access , and gifting record . Understanding and building this into a client ’ s holistic plan can add considerable value .
Read the case study and full article at canadalife . co . uk
MORE THAN WEALTH PRESERVATION
The Wealth Preservation Account from Canada Life offers more than Inheritance Tax efficiency . It is made up of a series of single-premium life assurance policies within a double trust arrangement . Your clients assign legal ownership of the policies but keep the right to receive the proceeds from each of the maturing policies .
As the Wealth Preservation Account includes a discretionary trust , decisions about who benefits , and when , are at the trustees ’ discretion . The trustees can also appoint policies to beneficiaries when needed .
DISCOVER THE WEALTH PRESERVATION ACCOUNT
Canada Life Limited , registered in England no . 973271 . Registered office : Canada Life Place , Potters Bar , Hertfordshire EN6 5BA . Member of the Association of British Insurers . Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority . Canada Life and design are trademarks of The Canada Life Assurance Company . Canada Life and design are trademarks of The Canada Life Assurance Company .
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