How many loan agreements do my clients need to fill out?

You’ll need to complete one loan agreement for each donor or settlor and one trust agreement for each application. So, for a joint trust, where there are two donors or settlors, then both individuals will need to complete a loan agreement. In this instance, there’ll be two loan agreements and one trust.

Are there any restrictions around who can be a trustee?

You’ll always need a minimum of two trustees. A donor or settlor is automatically a trustee. If there are two donors or settlors, for example married or civil partners, then a third trustee will need to be appointed.

What are the steps to setting up our Gift and Loan Trust?

Steps to setting up a Gift and Loan Trust: <ol> <li>Your client sets up the Gift and Loan Trust with us.</li> <li>Your client then lends a sum of money to the trustees in accordance with the loan agreement.</li> </ol> The trustees invest the money. This means they apply for the investment bond.

What loan repayments can my client take?

Your clients can take regular or ad hoc repayments from the loan. They cannot access any growth achieved within the trust as this is held for the beneficiaries. This means that once the loan’s been repaid, your client can’t receive any more payments from the trustees.

What happens when my client dies?

If your client dies and was the only, or last, life assured then the bond will end and income tax may need to be paid. Any outstanding loan will form part of your client’s estate and the executors will usually ask for the outstanding loan to be repaid. There might be a chargeable event, if the underlying bond, or any of the policies making up the bond, need to be surrendered. If your client has made a will, where they pass on any outstanding loan, then the bond won’t have to be surrendered. Where there is another life assured, the bond can continue.

Gift and Loan Trust

Inheritance tax planning with access to your money

With this trust, you loan the trustees a lump sum, on an interest-free basis. As it’s a loan to the trust, you’ll get unlimited access to the outstanding loan, taking regular or ad hoc payments. The outstanding loan stays inside your estate so is in scope for inheritance tax. However, you won’t need to pay inheritance tax on any investment growth.

Find all the documents you need for our Gift and Loan Trust.

For investment bond and protection documents, including application forms and guides, visit the individual product homepages or the document library.

Key documents

Client guide

Gift and loan client guide

Discretionary trust tax notes

Discretionary Gift & Loan Trust Tax Notes

Choosing an appropriate trust

Additional documents

Letter of wishes

Nomination of beneficiaries

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Frequently asked questions

You’ll need to complete one loan agreement for each donor or settlor and one trust agreement for each application.

So, for a joint trust, where there are two donors or settlors, then both individuals will need to complete a loan agreement. In this instance, there’ll be two loan agreements and one trust.
Steps to setting up a Gift and Loan Trust:
1. Your client sets up the Gift and Loan Trust with us.
2. Your client then lends a sum of money to the trustees in accordance with the loan agreement.
The trustees invest the money. This means they apply for the investment bond.
If your client dies and was the only, or last, life assured then the bond will end and income tax may need to be paid.

Any outstanding loan will form part of your client’s estate and the executors will usually ask for the outstanding loan to be repaid. There might be a chargeable event, if the underlying bond, or any of the policies making up the bond, need to be surrendered.

If your client has made a will, where they pass on any outstanding loan, then the bond won’t have to be surrendered.

Where there is another life assured, the bond can continue.

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Key documents

Support guides

Client guide

Discretionary trust tax notes

Choosing an appropriate trust

Trust register/trustees’ obligations

Opening a new trust

Bare trust deed/loan agreement

Discretionary trust deed/loan agreement

Bare trust additional loan

Discretionary trust additional loan

Managing an existing trust

Loan waiver deed

Appointing/Retiring trustees