Product Estate Planning Gift And Loan Trust 680X392

Gift and Loan Trust

Inheritance tax planning with access to your money

How the trust works

A trust is a way of managing assets (such as money or investments). It’s a legal arrangement where someone (the settlor) puts assets into a trust and appoints a person or group of people (the trustees) to look after them, for the benefit of a group of people (the beneficiaries). There are various types of trusts, with different features and benefits.

Our Gift and Loan Trust

Set up the trust with a £10 gift and lend a sum of money to the trustees on an interest-free basis. The trustees will then use this lump sum to take out one of our investment bonds. 

Once the trust is fully set up, you can take regular or ad hoc withdrawals from the lump sum you’ve loaned. However, you can’t benefit from any investment growth made within the bond.

The trust will continue until the investment is given to the beneficiaries.

Accessing your money

With a gift and loan trust, you can access the loan at any time. This means you can withdraw money from the loan amount, although you won’t be able to benefit from any investment growth.

A bare or discretionary trust?

This trust can be set up as either a bare or discretionary trust.

Bare Gift and Loan Trust

With a bare trust you can’t change the beneficiaries, so you’ll need to be certain about who you choose. Once you’ve received your loan back, the trustees will manage the remaining investment until the beneficiary is 18 years old. The beneficiary can then manage the investment themselves.

Discretionary Gift and Loan Trust

With this option, once you’ve received your loan back, the trustees can manage the trust at their discretion. This means they can make decisions such as who’ll benefit from the trust, how much money they’ll get and when.

Products that can be used with this trust

You can use the following investment bonds with our Gift and Loan Trust. Click on the links to find out more.


Income Tax

You might need to pay income tax on any money withdrawn from an investment bond in a gift and loan trust. The person who needs to pay the income tax will change, depending on whether the trust is set up as a bare or discretionary trust.

Inheritance Tax

The outstanding loan always stays in your estate, which means it’s in scope for inheritance tax.

Tax rules depend on individual circumstances and may change. Speak to an adviser, if you need more information on tax.

What are the risks?

Just so you’re aware, we’re unable to change the terms of your annuity policy once we’ve set it up. Your income will stop when you die unless you opt to include death benefits. Inflation will reduce the spending power of your income, especially if you haven’t chosen a rising income. The value of your investment can go down as well as up and you may get back less than you invest. Tax rules depend on the type of investment and individual circumstances and may change. Other annuity providers may provide you with a better outcome.

Next steps

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