Fixed Loan Trust
For Investment Bond
The Fixed Loan Trust enables your clients to achieve inheritance tax (IHT) savings over time while allowing for continued access to their original capital. Any investment growth is outside of their estate from day one and held for specific, named beneficiaries. Optimum IHT savings can be made where loan withdrawals are taken and spent by your client, because the outstanding loan amount will reduce over time until the whole amount has been repaid.
- Achieve IHT savings over time.
- Gives clients access to their original capital.
- Any investment growth held outside client's taxable estate from day one.
- Joint or single settlements can be made.
- Available in conjunction with the Investment Bond.
- Not suitable for clients who require control and flexibility.
- Ability to create an absolute (bare) trust.
Other information you need
The Fixed Loan Trust is 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 are unable or unwilling to make outright gifts as they need (or may need) access to their original capital
- who have a lump sum available for investment
- who are willing to forego access to future growth on their investment
- who want any investment growth to fall outside their taxable estate from day one
- who are willing to decide now who would benefit from the amount invested and accept that they will not be able to change their decision at a later date
- 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.
Not for your client?
Take a look at our other trust options
- The Fixed Loan Trust is an effective estate-planning solution for clients who wish to achieve IHT savings over time and wish to have continued access to their original capital.
- As the trust is established on an absolute basis, there are no reporting obligations or ongoing IHT charges to consider.
- The investment will be made by the trustees of the Loan Trust.
- The Trust is designed for use with the Investment Bond
- The Loan Trust is not subject to any charges.
- Please see the Investment Bond for charges in relation to the bond.
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.
Before you apply
Before proceeding to the application stage you should ensure that your client wishes to set up a Loan 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 Loan Trust
Please also ensure your client has read the important notes for applications (PDF)
The application stages (new investment)
- Complete the Loan Trust Declaration and Loan Agreement (PDF)
- You will then need to print the forms and ensure they are signed by all the relevant parties.
- Trustees complete the bond application form as the applicants.
- The trustees can invest in the Investment Bond (PDF)
The following items should accompany the application:
- cheque for investment amount (can be drawn on the settlor(s) bank account)
- confirmation of verification of identity of the settlor(s) and all additional trustees
- copy of illustration.
Policy documents will be issued to the trustees.