Spousal Bypass Trust

Question 1

Benefits of SBT for Davids SIPP (10 marks)

Answer 1

• benefits paid into a discretionary trust
• June could be a trustee
• and a potential beneficiary
• income could be paid as loans
  to be repaid on June’s death
• reducing her estate value
• that maybe to detriment of the estate payable to Joshua
• Karen can be nominated as potential beneficiary
• ensuring that on June’s death the pension funds are distributed in line with Davids wishes
• the trusts are complex/expensive
• can incur period and exit charges
• if David dies after 75 the payment into the trust will be taxed at 45%