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Welcome to RL360's

dedicated financial adviser website

For financial advisers only

Not to be distributed to, or relied on by, retail clients

Discounted Gift Trust (DGT)

RL360°’s DGT allows UK domiciled individuals to gift a policy into a trust, receive an income and immediately reduce the value of their estate for IHT purposes. It can be established on a Bare or Discretionary Beneficiary basis.

The trust allows for both a Gifted and an Access Fund to be created.

The creation of the Access Fund is optional and is essentially a ‘rainy day’ fund which provides the Settlor with access to capital should unforeseen circumstances occur. If in the future, the Settlor decides they no longer require access to this fund, it can be gifted to the trust to be held for the benefit of their nominated beneficiaries.

RL360°’s DGT is trust based as opposed to product based which provides flexibility if the trustees should decide to change the underlying assets.

General features of the trust

  • it can be established with single or joint settlors
  • the Settlor is automatically included as a trustee
  • the trust can accept increments to the trust fund whilst the Settlor is still alive and these can be used to top-up income. Furthermore, these further gifts can also be discounted subject to a satisfactory underwriting outcome.
  • the trust allows the Settlor the option of creating an Access Fund
  • the trust will avoid Manx Probate assuming there is a remaining trustee alive at the time of the death of the last life assured on the policy

The DGT may be suitable for individuals who

  • are UK domiciled or deemed UK domiciled for Inheritance Tax purposes
  • are looking to reduce the value of their estate for Inheritance Tax purposes and are prepared to make a gift so long as their standard of living can be maintained
  • can afford to gift away any potential growth on their existing capital
  • are in good health
  • require an immediate reduction in Inheritance Tax
  • require access to pre-determined capital payments from the trust
  • are not confident about gifting away all of their disposable capital and would like the ability to retain access to some of it should unforeseen circumstances occur

Important notes

Please note that every care has been taken to ensure that the information provided is correct and in accordance with our current understanding of the law and practice at Her Majesty's Revenue and Customs (HMRC) as at August 2012. You should note however, that we cannot take on the role of an individual taxation adviser and independent confirmation should be obtained before acting or refraining from acting upon the information given. The law and HMRC practice are subject to change. Legislation varies from country to country and the policyholder's country of residence may impact on any of the above.