The group believes the lifestyle trust gives advisers a more flexible option for their clients’ inheritance tax planning, as well as being suitable for clients of all ages, including younger generations seeking to plan for the future.
Unlike a discounted gift trust, where rights to withdrawals are established at the outset and fixed, the lifestyle trust allows greater flexibility, useful when planning over a longer timeframe as an individual’s needs change.
Longevity structure
Old Mutual Wealth said as people are living longer, there is less certainty over the amount of money they will need at different stages of their life.
The lifestyle trust allows the settlor to set the future dates of possible withdrawals, as well as stating the number of policy segments they may wish to access at each withdrawal.
As they approach these dates, the settlor then decides whether or not to take the entitlement.
If they take the entitlement, or take no action at all, the pre-established policy segments will move into a bare trust to be accessed immediately, at a later date or passed on to another.
Alternatively, if they postpone or bypass the entitlement, the funds stay within the trust and will continue to be outside the settlor’s estate for IHT purposes.
Clients can top up the trust at any given point.
IHT efficiency
The product will be available to those either invested in an Old Mutual Wealth bond or an Old Mutual International bond – either from the group’s Isle of Man or Ireland-based office. International bond customers have the option of Old Mutual International Trust Company running the trust on their behalf.
Rachael Griffin, financial planning expert at Old Mutual Wealth, said the product offered the expected IHT efficiency of a trust, without the usual restrictions.
She said: “This flexibility will help make trust planning more attractive to those who might otherwise see trusts as locking away their savings.”
