We’ve made our Trust Deeds more flexible to better support our customers when creating a new Discounted Gift Trust (DGT). Find out more about the options now available.
What's changed?
Historically, Discounted Gift Trusts (DGT) could only be established with a new Canada Life bond by immediately assigning the new bond into trust.
Using our new deeds, once underwriting has been completed, DGTs may now be created in one of three ways:
- The donor/settlor invests in an investment bond which is immediately assigned to the trustees
- The donor/settlor makes a gift of cash to the trustees which the trustees invest into a bond
- The donor/settlor may take out a new Premiere or Premiere Europe Account, without setting up a trust, with the option to assign the bond into a DGT in the future*
Why are the new options important?
By establishing a DGT with a gift of cash, donors/settlors don’t have to wait until a policy is in force before a gift for Inheritance Tax purposes is made. When time is a factor, the trust can be set up immediately with the trustees investing in a bond afterwards.
By taking out a bond now, with the option to assign the bond into a DGT in the future, customers have the flexibility to make a gift later in life if their circumstances change. They can continue to enjoy all the features and flexibility of their policy until they begin the process of assigning it into trust. There is no obligation to ever place the bond into trust. Customers have complete flexibility. If the trust is not needed in future, it doesn’t have to be set up. The policy can continue unchanged.
How does a Discounted Gift Trust work?
A DGT could help clients reduce their inheritance tax liability by making a lifetime gift into a trust, which may be discounted for inheritance tax purposes, whilst retaining the right to receive fixed regular payments at specified intervals for life or until the value of the investment is exhausted.
The right to regular withdrawals (the ‘retained rights’) are carved out on absolute trust for the donor/settlor within the provisions of the trust and rests with them for the rest of their life or until the fund is exhausted. These retained rights cannot be defeated.
The remaining rights (the ‘gifted rights’) are held by the trustees in the trust for the benefit of the beneficiaries as chosen by the donor/settlor. The donor/settlor cannot be a beneficiary of the trust of the gifted rights.
Before applying for a DGT, the donor/settlor must complete our standalone Medical Questionnaire. We then calculate the Discount and provide a personal Discounted Gift Valuation and illustration.
Once terms are offered and accepted, the application form and/or Trust Deed must be fully completed.
For more information on DGTs, as well as copies of our Medical Questionnaire and Trust Support Guide, please visit our website.
* In force Premiere or Premiere Europe Accounts may be placed into a DGT if they;
- Are held on a Capital Redemption Bond basis
- Commenced on or after 1 January 2026, and
- Have been in force for over 12 months
If any of the above criteria are not met, we are unable to process a request to place the existing policy into a DGT.