Product Estate Planning Gift Trust 680X392

Gift trust

Pass on your money in a tax-efficient way

Paul’s story

A bare Gift Trust: Gifting money outright

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Paul’s goals

Paul is 52 and is guardian and godfather to his nephew Harry, who’s 8.  Paul wants to give Harry £30,000 as an outright gift but doesn’t want him to be able to access the funds until he’s 18.

Choosing a bare Gift Trust

As Harry is a minor, Paul decides to put £30,000 into an investment bond held within a bare gift trust. This will potentially receive investment growth for as long as the investment is held.

Paul understands that a bare gift trust is a fixed trust, so the beneficiaries cannot be changed. As Paul is sure he wants to leave the money to Harry, he’s happy with this trust option.

Although Paul can’t receive any money from the trust, he does want to have some control over how it’s managed. For this reason, Paul makes himself one of the trustees.

Tax efficient investing

Paul dies nine years’ later. After seven years, the full value of the policy leaves Paul’s estate, which means there’s no inheritance tax to pay on it. This means the assets can be paid out to Harry when he’s 18, without having to wait for a grant of representation.

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