Why choose our Discounted Gift Plan?
Our Discounted Gift Plan could help your clients:
- Reduce estate value and inheritance tax liability
- Receive fixed withdrawals until the bond value is used up
- Increase flexibility in their choice of beneficiaries
Discounted Gift Plan benefits
Reduce estate value
If discounted, the gift value for inheritance tax purposes can be less than the amount invested, which may immediately reduce the value of your client’s estate.
Inheritance tax savings
The amount gifted into the plan will fall outside the estate after seven years. And any growth in investments held in the plan will immediately be outside the estate.
If your client dies, payment can be made from the trust to beneficiaries or trustees without any need to wait for probate or confirmation.
Client can keep access to income
Our Discounted Gift Plan is designed for clients who want to continue to receive fixed withdrawals. They’ll set these at outset and receive these until bond value is used up.
This plan allows your clients to select beneficiaries without including this in a will. For more flexibility, a Discretionary Trust or Flexible Trust should be used.
Discussing this plan with your clients can start a wider conversation about estate planning, which could lead to other business opportunities.
How our Discounted Gift Plan works
The Discounted Gift Plan is simple to set up and operate. It lets clients make a gift – and the value of this gift can be ‘discounted’, resulting in a lower inheritance tax liability if they die within the first seven years.
The client establishes a trust, appoints trustees and may nominate beneficiaries. The gifted assets are passed to the trustees, who use the money to purchase a Standard Life Bond.
The following bonds can all be used with our Discounted Gift Plan:
- International Bond
- Tailored Investment Bond
Lifetime access to withdrawals
To satisfy the rules of the trust, your client must take regular, fixed withdrawals from the plan until the bond value is used up.
The maximum annual withdrawal is 10% of the amount invested (depending on the type of bond selected).
While your client is alive, no other beneficiaries can benefit from the plan.
Discounting the gift
We will ‘underwrite’ your client – and considering their age and state of health – can place a discounted value on the gift.
This is done to estimate the market value of your client's retained rights, which are the withdrawals they'll receive in their lifetime
The health evidence is used to establish the ‘discount’ that will apply – but the discount figure is not guaranteed and HMRC may reduce the figure.
Types of trust
With the Discounted Gift Plan, your clients can choose the type of trust that works best for them.
Age and investment limits
Your client must be at least 50 years old and have more than six months until their 90th birthday to apply. The minimum investment is £60,000.
Money invested is at risk. Tax may change in the future.