The WAY Gifts from Income Inheritor Plan is geared to those with high after-tax income, but who want to put a substantial part of their earnings beyond the reach of the IHT net.
Other candidates will be those with large investment portfolios where the impact of capital gains tax means that they cannot be distributed, but any surplus net dividend income can be gifted away with immediate exemption.
WAY Group chairman Paul Wilcox said: “Our plan offers investors a structured way of making instantly exempt ‘gifts’ – that is, money – out of income into trusts in such a way that the person making the gift retains access to the money. Along with the plan’s flexibility, it immediately reduces the inheritance taxable estate by making tax-exempt gifts into trust.
“It will be particularly attractive to those who earn large amounts of money in a relatively short space of time, but who want to make early provision for passing on their wealth so they do not have to hand over 40 per cent to the Government in death duties – but they can still have those funds back at any time subject to the powers given to their elected trustees.”
The trust has a maximum life of 80 years, so there is no compulsion for the trustees to pay out benefits at any particular time. Appointments to beneficiaries can be made as a lump sum or spread over a period of time, even after the donor’s death.
And while the money allocated to the plan means that the ‘gift’ will effectively be outside of the estate – so the Chancellor cannot get at it – the assets can be accessed in the future.
“The trust deed incorporates the right for the donor, subject to the trustee’s approval, to have half their assets returned to them just before the fifth anniversary, and the remaining half just before the tenth anniversary of the original gift – it is the ultimate in flexible inheritance tax planning,” said Wilcox.
