Choosing an Appropriate Trust Solution

Notes

The Trust Solution tool concentrates on inheritance tax (IHT) mitigation and shows only some of the possible uses of Canada Life’s trusts. Clients may have needs other than minimising their IHT liability and each case should be assessed individually.

Changes to the taxation of gifts into trust in the Finance Act 2006 means that the order in which gifts are made is extremely important. If you are contemplating making chargeable lifetime transfers for IHT purposes, you should make sure that expert tax advice is taken regarding the impact of this transfer on other arrangements entered into previously or planned in the future.

Clients should consider making a will (or reviewing all existing wills) before additional estate planning is undertaken. All of the above trusts are for U.K. domiciled and resident clients. For non U.K. domiciled clients please contact your Canada Life account manager to discuss the excluded property trust.

Does your client want access to the gifted money?

Has your client a spouse or civil partner that died during the last 2 years?

Does your client want full access to the gift but to give away the growth?

Does your client want the option of taking income?

Does your client require fixed withdrawals?

Has your client decided on the specific individual(s) to benefit from the trust?

Does your client want the ability to restrict the age at which benefits are available to that individual?

We recommend the following Trust for you

This tool concentrates on inheritance tax (IHT) mitigation and shows only some of the possible uses of Canada Life’s trusts. Clients may have needs other than minimising their IHT liability and each case should be assessed individually.

To use this tool, please answer the questions to the left.

Consider a deed of variation

Gift and loan trust

Trust established by making a gift of £10 and subsequent loan to trustees
Client receives repayments of loan/capital as regular payments, such as the 20 year 5% a year tax-deferred allowance
Outstanding loan amount in client’s estate

Discount trust

Trust established by the transfer of an offshore bond to trustees
Client has a carved-out absolute interest in a pre-determined series of withdrawals
Gift is a PET1 or a CLT3, depending on type of trust
At time of making the gift, there is a discount2 from IHT in the event of the client’s death within seven years of the gift

Wealth preservation trust

Trust established by making a gift to trustees
Client has a reversionary interest allowing ‘income’ on a series of pre-selected maturity dates
Gift is a CLT3
The trustees have the flexibility to defer taking ‘income’ and can

Discretionary gift trust

Trust established by making a gift to trustees
Client has no access to gifted assets
Gift is a CLT3

Discretionary gift trust

Trust established by making a gift to trustees
Client has no access to gifted assets
Gift is a CLT3

Controlled access trust

Trust established by making a gift to trustees
Client has no access to gifted assets
Named individuals will benefit at specified age (up to age 49)
Gift is a PET1

Bare gift trust

Trust established by making a gift to trustees
Client has no access to gifted assets
Named individuals will benefit from age 18
Gift is a PET1

Controlled access trust

Trust established by making a gift to trustees
Client has no access to gifted assets
Named individuals will benefit at specified age (up to age 49)
Gift is a PET1

Bare gift trust

Trust established by making a gift to trustees
Client has no access to gifted assets
Named individuals will benefit from age 18
Gift is a PET1

The tool should be used in conjunction with the brochures and client case studies available from the Canada Life Marketing group.

Your Selected Questions

Does your client want access to the gifted money?

Has your client decided on the specific individual(s) to benefit from the trusts?

Discretionary Gift Trust

Has your client decided on the specific individual(s) to benefit from the trusts?

Has your client a spouse or civil partner that died during the last 2 years?

Consider a Deed of Variation

Does your client want full access to the gift but to give away the growth?

Gift and Loan Trust

Does your client want the option of taking income?

Does your client require fixed widthdrawls?

Wealth Preservation Trust

Does your client require fixed widthdrawls?

Discount Trust

Has your client decided on the specific individual(s) to benefit from the trusts?

Discretionary Gift Trust

Has your client decided on the specific individual(s) to benefit from the trusts?

Does your client want the ability to restrict the age at which benefits are available to that individual

Bare Gift Trust

Does your client want the ability to restrict the age at which benefits are available to that individual

Controlled Access Trust

Does your client want the ability to restrict the age at which benefits are available to that individual

Bare Gift Trust

Does your client want the ability to restrict the age at which benefits are available to that individual

Controlled Access Trust

Thank you for using the trust solution tool.
A flowchart showing the full range of options is available here:

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Potentially exempt transfer (PET)