DGT Flashcards
1
Q
Recommend and justify a suitable trust to reduce estate but provide regular income
A
- DIscounted Gift Trust
- discount underwritten bars on ages and health
- likely to be high as young and in good health
- discount immediately reduces the estate for IHT
- all growth outside the estate for IHT
- no IHT charge of gift is below available NRBs
- exit and period charges though will apply
- will be free of IHT after 7 years
- a fixed income is set up at outset
- if trust assets are an investment bond
- then income payment s are made on a tax deferred basis
- providing they don’t exceed their 5% allowances of original capital invested
- IB is non income producing
- reduces admin for trustees
- grandchildren Karen and Joshua could be added as lives assured
- which avoids a chargeable event on second death
- use a discretionary trust
- and make Karen, Joshua and grand children potential beneficiaries following second death
- provide instructions (letter of wishes) on how assets should be distributed on second death
