The use of discretionary will trusts linked to offshore bonds as inheritance tax (IHT) planning vehi...
The use of discretionary will trusts linked to offshore bonds as inheritance tax (IHT) planning vehicles has vastly increased since the publication of the Finance Bill earlier this year, according to Sovereign Will and Probate Services.
Howard Fryer, chairman of Sovereign and senior partner at Fryer Chandler Solicitors, which produce all of Sovereign's wills, said Sovereign had seen a 40% increase in the number of discretionary will trusts being drafted for the clients of investment advisers by Sovereign since the publication of the Finance Bill.
"It is clear that many investment advisers have recognised that post-Finance Bill, a discretionary will trust still provides one of the most effective planning tools for reducing the IHT liability on a married or civil partnership couple's joint estate. Joint nil rate band planning, using a will trust remains relatively unaffected by the changes in the taxation of trusts, as announced in this year's budget," Fryer said.
He said it had also become apparent from discussions with IFAs that many advisers are setting up offshore single premium investment bonds on a single owner, joint lives assured basis in order to equalise their clients' estates. In this way, when one partner dies, their bond can be used by the trustees of their will trust as a very trust friendly asset, with minimal or no taxation on the trustees or the beneficiaries who receive income withdrawals.
40% increase in number of discretionary will trusts drafted since Finance Bill
Joint nil rate band planning using a will remains relatively unaffected
Many advisers establishing offshore single premium investment bonds
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