Controlled Access Trust

About John and Jean         

John is 73 and Jean is 71. They have £450,000 in savings that they’d like to set aside for their three grandchildren, aged eight, five and three.

Their goals

John and Jean want to pay for their grandchildren’s school fees, until they’re 18.  After that, they want to be able to provide a pot of money to help support them at key points in their lives – to fund a gap year, pay for university fees or help towards a deposit on their first home.

Although the couple want to support their grandchildren and leave them an inheritance, they don’t want the children to have automatic access to the trust when they’re 18.

The Controlled Access Trust

With the help of a financial adviser, John and Jean decide to invest £150,000 for each of their grandchildren, into three separate Controlled Access Accounts.

How the payments work

The Controlled Access Trust is a bare trust, with a series of life assurance policies that have different maturity dates. The policies can be set up to mature individually or in groups, at specific dates until the children reach 18. This means that payments can be made for the children at key times in their lives.

This is a tax-efficient way to receive payments and securely controlled by the trustees, who’ve been appointed by John and Jean.

If all the maturity proceeds aren’t needed, then the maturity dates can be changed to a date after the grandchildren’s 18th birthday. This can be anytime up to the age of 49.

Flexible access

John and Jean are able to control when the payments are made to the children as they’ve made themselves and the children’s parents the trustees.

Tax efficiency

The gift into each Controlled Access Account is a potentially exempt transfer and therefore outside of John and Jean’s estates, as long as they live for another seven years.