Trusts - not just a tool for the wealthy

Many people think that trusts are used solely by the very wealthy and whilst there may be a degree of truth about this, trusts can offer a range of options to people from all walks of life.

When looking at gifting money to an individual or a group of individuals, many will choose to put the assets into a trust rather than making an outright gift as it can provide more flexibility and help reduce inheritance tax. Some solutions even allow the person making the gift to receive payments from the trust.

A trust is a legal arrangement where a person or group of people [the trustees] are appointed by someone [the settlor] to look after assets for the benefit of another group of people [the beneficiaries].

Giving money away can help reduce the value of someone’s estate and therefore the amount of potential inheritance tax that is payable when they die.

There are tax rules depending on the type of trust used and you should discuss these with your professional adviser to make sure that any specific solution is right for your circumstances and objectives.

The value of investments can fall as well as rise and you should speak to a professional adviser to ensure that any investment is suitable for you.

When looking at the trust solutions available from Canada Life, there are essentially two types of trust.

  • A bare or absolute trust where a beneficiary is named outset and cannot be changed.
  • A discretionary trust where a class of beneficiary can be described, such as ‘all my children or grandchildren’ giving the trustees discretion over who will benefit and when they benefit.

Canada Life has many years’ experience designing and providing trust solutions to help with preserving wealth and effectively passing it on to future generations.

The range of solutions available include the following:

  • Probate trust - This removes the need for probate on the underlying investments and the associated delay, but is not used for inheritance tax planning.
  • Gift trusts - For those looking to make an outright gift.
  • Gift and loan trusts - These allow the settlor to make an interest-free loan to the trustees, who invest the money and make loan repayments back to the settlor, either as regular or one-off lump sum payments.
  • Discounted trust accounts - For those who want to gift money and receive fixed regular payments from the trust for the rest of their life.
  • Wealth preservation trust - For those who want to gift money and receive flexible payments as and when they are required, within certain limits. This is only available on a discretionary trust basis.
  • Controlled access trust - A bare trust solution specifically designed for grandparents who want to make provision for grandchildren.
  • Excluded property trust - Designed for individuals who are not UK domicile, but are likely to be in the future.

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Wealth Preservation Account

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Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised and regulated by the Financial Conduct Authority.