About the Gift Trust
The Gift Trust from Prudential and Prudential International provides an inheritance tax planning solution for clients who want to make an outright gift in a tax-efficient way.
Any potential growth on the investment will be outside your client’s estate from the start and, depending on circumstances, there may be no inheritance tax due on the trust fund.
It is essential to note that, once the trust has been set up, the client cannot benefit from it at all. The Gift Trust is therefore only suitable where your client does not want or need any future access to the capital or any growth it may produce.
Features and benefits
How does the Gift Trust work?
- The bond is put into trust during your client's lifetime.
- Payments can be made to the beneficiaries at any time, providing that your client does not benefit.
- The trust will continue to the end of the trust period or until all assets have been distributed.
- After your client's death, the trust can continue or be wound up with the proceeds paid out.
- The proceeds from the trust may be wholly or largely free of inheritance tax.
- The trust can be set up by a single or joint donor.
- It can be written as an Absolute or Discretionary Trust, depending which better suits your client’s needs.
Choice of trusts
The Gift Trust can be written as either an Absolute or Discretionary Trust, depending on your client’s needs.
Absolute Trust
Your client must select the beneficiaries and their share of the trust fund when setting up the trust. May be suitable if your client is sure of how they would like trust assets to be distributed.
Discretionary Trust
Trustees can alter the beneficiaries of the trust or their share of it. May be suitable if your client thinks this may be necessary in future.
Choice of products
Trustees can choose at least one of the following three products.
Ongoing adviser charges
Prudential will facilitate Ongoing Adviser Charges for advice given to the trustees, funded by withdrawals from the bond which will impact on the 5% tax deferred allowance.
As the trustees are not party to the bond application form, the ongoing adviser charge instruction section on the application form must be left blank. Instead, the trustees will need to complete the appropriate adviser charge instruction form.
Trustees should not pay for ongoing advice given to the settlor as that could be regarded as a breach of trust with adverse tax consequences.
Tools & calculators
Important information
The impact of taxation (and any tax reliefs) depends on individual circumstances.
The information is based on our understanding, of current taxation, legislation and HM Revenue & Customs practice, all of which are liable to change without notice.
