Overview
A discretionary trust that uses a client’s excess income to build a nest egg for beneficiaries in the future, free of IHT.
Quick facts
- For use with the Collective Investment Bond.
- Available under the law of England and Wales and Scots Law.
- A planning solution using the Discretionary trust - Settlor excluded trust.
- Allow your clients to make use of the ‘normal expenditure out of income’ exemption by using surplus income to make gifts to a discretionary trust.
- This is a trust where your client, the settlor, cannot be included as a beneficiary.
- The settlor chooses their trustees. They can also appoint themselves as a trustee.
- Classes of beneficiary are defined within the deed - For example ‘Children and decedents of the settlor. Beneficiaries not covered by the classes can be added to the trust by the settlor.
- The trustees use their discretion to decide who may benefit from the trust and when.
- The beneficiaries cannot demand their rights from the trustees.
Suitability
Technical support
- Discretionary trust calculator - Calculate the entry, periodic and exit charges for your client’s trust.
- Surplus income calculator - Our expenditure out of income tool enables your clients to keep records of their payments and the information can then be used for submission to HM Revenue & Customs.
- Taxation of discretionary trusts: Quick reference guides - Quick guides showing you how to calculate the entry, periodic and exit charges.
- Normal expenditure out of income: Quick reference guide - A quick guide to the IHT exemption.
- Trust: Who pays the tax? A brief overview of the income tax, CGT and IHT treatment of trusts.