Estate planning
Gift Trust
A straightforward discretionary or absolute trust for a client who is giving capital away and does not need access to it again.
Glendalough, Co. Wicklow · Superbass, CC BY-SA 4.0
Who it is for
Broker-introduced clients making outright gifts
What it does
- Absolute or discretionary versions
- No settlor access to trust property
- Seven-year clock starts on the date of the gift
- Works with our bond range or with external assets
The product in full
The Gift Trust is the simplest thing in this range, and the simplicity is the feature. A client who is giving capital away, does not want it back, and does not need an income from it should not be sold a structure with a loan account, a discount calculation or a release schedule attached. They need a trust deed and a date.
Two versions exist because two quite different intentions get described the same way. An absolute trust fixes the beneficiaries at outset: the named person is entitled, and the trustees hold the property for them until they are able to receive it. A discretionary trust names a class instead, and leaves the trustees to decide who gets what and when.
The choice is not about tax first. It is about whether the client knows, today, who should benefit and in what proportion. A parent gifting to one adult child with settled circumstances is usually describing an absolute trust; a grandparent gifting for grandchildren, some of whom are not yet born, is describing a discretionary one.
Literature
Product literature is issued to appointed intermediaries. Ask your underwriter, or request it through the enquiry form.
- Gift trust deedOn request
- Trust register guidanceOn request
How it works
What happens, in order
From the first enquiry to the point the cover, the contract or the facility is in place.
Absolute or discretionary is decided
Fixed beneficiaries, or a class with trustee discretion. This is the substantive decision and it is difficult to undo.
The deed is executed and the gift made
The seven-year clock starts on the date of the gift. There is no minimum.
The trustees invest the trust property
Our bond range, or external assets — the deed does not require the trust to hold our own products.
The trustees administer and distribute
Under the deed. The settlor has no access to the trust property at any point, which is what makes this an outright gift.
The numbers
A worked example
Illustrative arithmetic, so the shape of the product is visible rather than described. Nothing here is a quotation or a projection.
Absolute against discretionary, on the same £100,000
The same gift under the two versions of the deed. It is a comparison of who decides, not of investment outcomes.
- Gift
- £100,000
- Absolute — beneficiaries
- Named at outset, fixed
- Absolute — trustee discretion
- None over entitlement
- Absolute — beneficiary’s right
- Absolute entitlement to their share
- Discretionary — beneficiaries
- A class, which may include the unborn
- Discretionary — trustee discretion
- Who benefits, how much, and when
- Discretionary — beneficiary’s right
- A hope, not an entitlement
- Settlor access, either version
- None
Not tax advice. The two versions are treated differently for tax as well as for control, and which suits a client depends on their own position and their own advisers’ view of it.
An illustrative discretionary class
A £100,000 gift, and how trustees might exercise their discretion over it years later.
Trust fund available for appointment
£100,000
- Appointed to the eldest grandchild£40,000 · 40%At 25, for a property deposit
- Appointed to the second grandchild£35,000 · 35%At 22, towards education costs
- Retained for a grandchild born later£25,000 · 25%Not in existence when the trust was made
View these figures as a table
| Amount | Share | |
|---|---|---|
| Appointed to the eldest grandchild — At 25, for a property deposit | £40,000 | 40.0% |
| Appointed to the second grandchild — At 22, towards education costs | £35,000 | 35.0% |
| Retained for a grandchild born later — Not in existence when the trust was made | £25,000 | 25.0% |
| Trust fund available for appointment | £100,000 | 100% |
Suitability
Where the Gift Trust fits
The cases it answers, the cases it does not, and what an underwriter needs before quoting.
It is the right answer when
- An outright lifetime gift the client will not need back.
- A grandparent gifting for a class that may grow.
- Any size of gift — there is no minimum on this trust.
Look at something else when
- A client who needs access to the capital, or an income from it.
- A client who wants a fixed release timetable — the Controlled Access Account does that.
What we need to quote
- 1.The settlor’s details and the gift.
- 2.Absolute or discretionary, and the beneficiaries or the class.
- 3.The trustees, and confirmation the client has taken their own tax advice.
Questions
What brokers ask us about this product
Can the trust hold assets other than your own products?
Yes. The deed does not require it to hold our bonds, and external assets are common.
Can an absolute trust be changed later?
The beneficiaries’ entitlements cannot simply be reallocated — that is what absolute means. If the client may want flexibility, the discretionary version is the one to discuss.
Is there a minimum gift?
No. It is the only trust in this range with no minimum, because the cost of the structure does not scale with the gift.
Request information
Ask us about the Gift Trust
The form reaches an underwriter in Dublin. If you are an intermediary, say so and we will route it to the broker desk.