Clerical Medical has unveiled a new Discounted Gift and Income Plan (DGIP) which enables clients to nominate specific beneficiaries while retaining rights to income.
The plan is suited to clients who want to reduce their potential inheritance tax liability but want to avoid the cost and reporting requirements associated with discretionary trust arrangements.
Unlike the Discretionary DGI, the new plan, which launches on September 17, avoids the immediate IHT of 20% for investments over £300,000. In this way the new plan is similar to a bare trust although a bare trust has no retained income rights.
The plan would be more likely to appeal to people who believe their named beneficiaries are unlikely to change in the future, whereas those who are unsure should look at the discretionary vehicle.
Nick William, chartered tax adviser at Clerical Medical, says: “This new DGIP plan retains income for the client while preserving the fund for the beneficiary, but without the IHT charges and reporting of the discretionary trust.”
The DGIP plan is available onshore with the Clerical Medical Discounted Gift and Income Bond (minimum investment into the bond is £50,000 and the bond has a factory gate pricing structure). Offshore, the plan can be accessed through Clerical Medical International Global Investor (minimum investment £100,000 and there are three charging structures).
The launch completes Clerical Medical’s range of DGIP products tailored to meet different clients’ requirements. Clerical Medical is also organising a series of DGIP seminars for IFAs starting at the end of 2007.
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