Gift Trust 

A Gift Trust invests capital by way of a gift to nominated trustees for the benefit of chosen beneficiaries. During the lifetime of the Trust the Trustees can release capital to the beneficiaries as they see fit. The gift is treated as either a PET or CLT depending on the type of structure required. This would only be suitable if you could afford to gift away capital in the knowledge that you will have no requirement for future access.

Discounted Gift Trust

This is a variation of a Gift Trust but with some crucial differences, mainly that 5% income withdrawals should be taken for life. On day 1 a portion of the asset being gifted it is treated as outside of the estate. This amount is referred to as the discount. The amount of the discount would depend on the gift, personal life expectancy and individual’s circumstances.

Loan Trust

A Loan Trust works differently in that you would retain ownership of the original capital and it remains in your estate. Because of this the creation of a Loan trust is neither a potentially exempt transfer (PET) nor a chargeable lifetime transfer (CLT). The growth however on the invested, or rather loaned capital, is set outside of your estate for Inheritance Tax purposes.

Further details on all options can be found in our Exclusive Estate planning Brochure.

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