Flexible Discounted Gift & Income Trust
For Investment Bond
The Flexible Discounted Gift and Income Trust enables your client to make a gift for inheritance tax (IHT) purposes while retaining the right to a fixed income for his or her lifetime. 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.
- Three different types of underwriting available.
- Joint or single settlements can be made.
- Suitable for clients who require flexibility and control.
- Offered in conjunction with new or existing investments into our Investment Bond.
Key details
Key details | |
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Eligibility |
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Features |
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Inheritance tax (IHT) |
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Income |
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IHT reporting |
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Key documents
Trust deed (PDF, 699KB)
Client brochure (PDF, 628KB)
Important notes for applications (PDF, 70KB)
See all our trust documents in one place, including forms, guides and brochures.
Other information you need
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The Flexible Discounted Gift and Income Trust, created on a discretionary trust basis, 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, which is, or will be, within their available IHT nil-rate band when the discount is applied
- who require an income from their investment for life and are willing to forego all other access to the invested funds
- who want flexibility and an element of control over the ultimate distribution of capital
- who are prepared to accept the reporting obligations and the possibility of tax charges under the relevant property regime.
Not for your client?
Take a look at our other trust options
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- The Flexible Discounted Gift and Income Trust is designed for clients who wish to mitigate their estate's potential IHT liability, and 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.
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The Flexible Discounted Gift and Income Trust is designed for use with the Investment Bond
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- The Flexible Discounted Gift and Income Trust 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 Flexible Discounted Gift and Income Trust, which is on a discretionary basis.
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 Flexible Discounted Gift and Income Trust application form (PDF, 699KB) by settlor(s) and additional trustee(s).
- Download and complete the investment application for the Investment Bond (PDF, 63KB) (where more than two lives assured are required the supplementary lives assured form (PDF, 63KB) 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.