‘A creative approach to inheritance tax planning’
The Inheritance Bond is a discounted gift plan with a difference. In common with a standard Discounted Gift Trust you get a regular payment for life and the capital passes to your beneficiaries on death. It offers effective inheritance tax planning, which may include an immediate reduction in the value of your estate for inheritance tax purposes.
The Inheritance Bond id designed to give you the income that is naturally generated from your investment. This means that the natural income paid to your will not eat into your beneficiaries’ inheritance.
Keeping back something for the future
Rather than take all the natural income from your investment, you have two other options.
- To cap your regular payments at 5% a year of your initial investment in the endowment plan (to avoid any immediate tax by using the 5% tax-deferred allowance).
- To save up all the natural income for the future.
Any of the natural income you don’t take can be redirected into a choice of investment funds. You can take this money later, through regular one-off withdrawals.
Any redirected natural income that remains in the plan, however, will be part of your estate and may attract inheritance tax.
Potential income tax benefits
When you die, the plan will end and the money in trust will pass to your beneficiaries. At this point, an ordinary onshore investment bond is likely to give rise to an income tax charge if you pay tax in excess of basic rate.
But with the Inheritance Bond, there will not usually be any income tax charge.
The Inheritance Bond offers both an absolute trust and a discretionary trust, so you can choose whichever better suits your own circumstances.
For further information, please contact Paradigm-Capital on 01273 321223 or email email@example.com