Scottish Life International has designed a new type of trust which it says helps get round the inheritance tax crackdown introduced in the 2006 Budget.
The trust allows the settlor to make a potentially-exempt transfer and establish a flexible trust without incurring an immediate IHT charge.
Under the 2006 reforms, transfers to trusts become immediately chargeable where the value exceeds the settlor’s available nil-rate band rather than being potentially exempt.
ScotLife International says its trust enables investors to reduce their IHT liability and allows trustees to provide for beneficiaries without creating absolute entitlements. It is tightlipped about the details of the new trust and is requiring advisers to sign non-disclosure documentation.
Technical officer Neil Chadwick says: “We have put together a trust which still enables you to have a full discretionary trust without having to pay the immediate inheritance tax charge. This trust offers investors the opportunity to not only reduce the value of their IHT estate but also the added flexibility of a fully discretionary trust.
“We had intended to make this available at an earlier date. However, we wanted to make sure that it was 2008 Finance Act-friendly.”