Fixed Discounted Gift and Income Trust
For Investment Bond
The Discounted Gift and Income Trust (creating fixed trust interests) is established on an absolute trust basis. This allows your clients to take action to immediately reduce their potential inheritance tax (IHT) liability (subject to underwriting) while retaining the right to a fixed income for life. Because the value of this income right will normally have no value on death, the value of the settlor's estate is immediately reduced for IHT purposes, achieving a discounted gift.
Key benefits
- Reduces potential IHT liability (subject to underwriting).
- Provides a fixed income throughout your client’s lifetime.
- 3 different types of underwriting available.
- Joint or single settlements can be made.
- Not suitable for clients who require flexibility and control.
- Offered in conjunction with new and existing investments into our Investment Bond.
Key details
Eligibility
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Features |
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Inheritance tax (IHT) |
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IHT reporting |
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Key documents
Underwriting/health questionnaire (PDF 733KB)
Important notes for applications (PDF 67KB)
See all our trust documents in one place, including forms, guides and brochures.
Other information you need
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The Discounted Gift and Income Trust (creating fixed trust interests) may be suitable for clients:
- whose estate is likely to be liable to IHT on death, even if maximum use is made of exemptions, reliefs and the nil rate band
- who have a lump sum available for investment
- who require an income from their investment for life, but are willing to forego all other access to the invested funds
- who are willing to make a decision now as to who should benefit from the invested amount and accept they will not be able to change their decision later
- who are content that adult beneficiaries could choose to direct the trustees how the funds should be invested and may call for payment of the trust fund at any time (subject to the settlor's entitlement).
Not for your client?
Take a look at our other trust options
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- The Discounted Gift and Income Trust is designed for clients who wish to mitigate their estate's potential IHT liability, but require a fixed income for life.
- Subject to underwriting, the retained right to income may lead to a discount on the value transferred into trust giving an immediate reduction in the potential IHT liability.
- In addition, because it is established on an absolute basis there is no lifetime IHT payable on the value of the gift regardless of the amount transferred.
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The Discounted Gift and Income Trust is designed for use with the Investment Bond
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- The Discounted Gift and Income Trust (creating fixed trust interests) is not subject to any charges.
- Please see the Investment Bond for charges in relation to the bond.
Important notice
Please note that charges, terms and limits may change. We may change the selection of funds that we make available. There may be restrictions on the amount that can be invested in certain funds. Please contact us for details of any restrictions that apply. Tax treatment depends on the individual circumstances of your client and may be subject to change in the future.
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Before you apply
Before proceeding to the application stage you should ensure that your client wishes to set up a Discounted Gift and Income Trust (creating fixed trust interests), which is on an absolute basis.
Should they wish to establish the trust on a discretionary basis, please look at our Flexible Discounted Gift and Income Trust
Please also ensure your client has read the important notes for applications (PDF 70KB)
The application stages
Step 1
- For full in-advance underwriting, a completed health questionnaire should first be submitted (see postal details in step 3).
- Once this has been received a projected discount will be provided where possible. If the projected discount is acceptable the application stage moves to stage 2.
Step 2
- Download and complete the Discounted Gift and Income Trust (creating fixed trust interests) application form (PDF 140KB) by settlor(s) and additional trustee(s).
- Download and complete the investment application for the Investment Bond (PDF 64KB) (where more than two lives assured are required the supplementary lives assured form (PDF 64KB) must also be completed) by settlor(s).
- Print the forms and check they are signed by all the relevant parties.
The following items should accompany the application:
- confirmation of verification of identity of the settlor(s) and all additional trustees
- copy of illustration
- cheque for investment amount
- payable to ‘Scottish Widows Limited – [settlor’s name]’.
Step 3
Send your applications by post to:
Scottish Widows
PO Box 28117
15 Dalkeith Road
Edinburgh
EH16 9ANStep 4
Policy documents will be issued to the trustees.
This trust is also offered on a concurrent/no underwriting basis. Please speak to your usual sales contact if you wish to proceed on either of these options.