Flexible Gift Trust (Discretionary)
Our Flexible Gift Trust can help your client to reduce the potential inheritance tax due on his or her estate. Because the Trust is written on a discretionary basis, the trustees use their discretion when deciding who ultimately benefits from the trust capital. As this is not a split trust the life assured, or settlor does not retain an interest in the policy. This means that they cannot receive benefits from a death, terminal illness or critical illness claim.
- Decisions about who will benefit can be changed.
- It can help your client to reduce any potential Inheritance Tax (IHT).
- Speed of payment.
Other information you need
Flexible Gift Trust (Discretionary) may be suitable for clients:
- Who want the appointed trustees to have overall discretionary powers to decide who will receive any payment.
- Whose estate is likely to be liable to inheritance tax (IHT) on death, even if maximum use is made of exemptions, reliefs and the nil rate band.
- Who are able to make an outright, irretrievable gift and have no requirement for access to the gifted amount, or any income generated, which would include for example, any entitlement to benefit from any critical illness or terminal illness claim that may be payable under any policy.
- Who want to avoid any delay in paying out the proceeds of their policy which may otherwise occur where probate (or confirmation) is required before payment could be made.
- Your client may want someone else such as their children to benefit from the policy on their life.
- The trustee discretion allows for future changes, for example, to include future children or grandchildren.
- The death benefits payable will not form part of the client’s estate and will be free from IHT. The trust may be subject to entry, periodic and exit charges but as our protection policies are regular premium and have no surrender value, this is highly unlikely.
- The benefits are paid to the beneficiaries quickly if there is a surviving trustee.
If you have decided that a Flexible Gift Trust (Discretionary) (PDF) is suitable for your client please send us the completed and signed trust documentation as soon as possible. We cannot treat a benefit as being under trust until we have received the relevant documentation.
Our trust forms are editable PDFs. This means that you can complete them online and email to your client for them to print and sign.
Completed, signed and dated, trust forms can be sent to us either by email (a scanned copy or even send a photo) or by post.
Please remember to include the relevant plan number and ensure that the form has been signed and dated.
Scottish Widows Protect Servicing Team
15 Dalkeith Road
Trusts are documents with legal significance that may affect the rights, obligations and tax position of your client and the beneficiaries. You should not proceed unless you are satisfied that you understand its effect and that it achieves your objectives. If you have any doubts or uncertainties you should seek the appropriate legal guidance. Special consideration may be required where persons are either resident or domiciled outside the UK.