This article defines the commonly used terminology (starting with letters A to D) in the tax and financial planning arena or within Old Mutual Wealth.
The trustees hold the assets for the beneficiary absolutely where a beneficiary has an immediate and absolute entitlement to income and capital of the trust. See 'Bare trust'.
Performs a similar role to an Executor but is appointed where the deceased did not leave a Will. They are appointed by the Court to supervise the administration and distribution of the deceased’s estate. Since there are no instructions left in a Will, the administrators must distribute the estate of the deceased according to the rules laid down by statute. For example, in the UK in accordance with the intestacy rules.
The person to whom an asset or property is transferred via an assignment.
A transfer of intangible property (e.g. life insurance policy) from one or more persons to another.
The person transferring the property under an assignment. i.e. the policyholder.
The person who has been appointed to act on behalf of another under a Power of Attorney.
The trustees hold the assets for the beneficiary absolutely where a beneficiary has an immediate and absolute entitlement to income and capital of the trust. The term is more commonly used where the beneficiaries are minors.
A person or group of people entitled to benefit, for example, from a trust or Will. A Beneficiary could also be a registered company or charity.
Capital gains tax
This is a UK tax imposed on the growth on capital made on disposals of capital investments either by selling them or gifting them to another person.
Capital redemption contract
A contract between the insurer and the bondholder. It is based on actuarial calculations whereby in return for payment of single or periodic payments made to the insurer, a specified sum or series of sums is payable to the bondholder after a specified duration.
The main system of law in the world, derived from statutes or constitutions that are passed and enacted by the Government. This system of law has developed based on custom.
A person who has formed a civil partnership.
The legal relationship existing between a same sex couple who have registered their partnership in accordance with the Civil Partnership Act 2004 (England and Wales), which came into force on 5 December 2005.
Chargeable lifetime transfer (CLT)
A transfer of value made as a gift during a person's lifetime that is not covered by a specific exemption and therefore may give rise to a UK inheritance tax liability.
The most common chargeable lifetime transfers are lifetime gifts into discretionary trusts.
Transfers into interest in possession trusts either during lifetime or by Will on or after 22 March 2006 will also be chargeable lifetime transfers (unless the trust is for bereaved minors, created on death and gives rise to an immediate interest in possession, or is created for the benefit of a disabled person). Accumulation and maintenance trusts created in Wills where the testator dies on or after 22 March 2006 will become 18 to 25 trusts and are taxed at a one off IHT rate. The rate increases with the more years the trust continues after the age of 18 before entitlement determined.
Transfers into bare or absolute trusts are not chargeable lifetime transfers.
This type of legal system has developed on decisions made by courts which have formed precedents. This is the legal system in England and most of the old and new Commonwealth countries. It is also a system which has provisions for trusts.
This is the tax paid by companies. In the UK, corporation tax is payable on all capital gains as well as income.
Court of Protection
This is a UK court. The Court of Protection makes decisions in relation to the property and affairs and healthcare and personal welfare of individuals who lack capacity, where they have not created a Lasting or Enduring Power of Attorney whilst they had capacity.
A written document, such as a deed of assignment, that must make it clear on its face that it is intended to be a deed and validly executed as a deed.
Deed of Variation
This type of deed allows Wills to be varied by the residuary beneficiary or beneficiaries within two years of the date of death. This is useful if the survivor(s) wish to make use of the inheritance tax nil rate band and make gifts over to, for example, children.
Discounted gift trust (DGT)
A trust which allows a settlor to give away assets for UK IHT purposes, whilst still retaining a right to take regular withdrawals during their lifetime. The value of the gift ( usually the premium paid to the bond) is potentially discounted by the value of this retained right (in basic terms, the right to receive withdrawals is valued) to reduce the liability to UK IHT immediately.
Discretionary fund manager
An asset manager who, based upon the investment profile of his or her client, is mandated to act as the agent of the client and to make investment decisions as he sees fit within that mandate. They can also be known as Discretionary Investment Managers or Discretionary Asset Managers.
A trust under which the trustees are given discretion as to whom, within a class of beneficiaries chosen by the settlor, should receive trust property (as either income or capital) and when and how much each should receive.
A uniquely UK status. Domicile is a concept of general law and is distinct from nationality or residence. Whilst it is possible to be resident in more than one country, it is not possible to be domiciled in more than one country at any given time. Generally speaking, but not always, this means that a person will be domiciled in the country in which they have their permanent home.
This is a legal concept for UK inheritance tax purposes. Where a person is not a UK Domicile, they are treated as if they were domiciled in the UK if they were domiciled in the UK at any time within the three calendar years before the relevant transfer event (death or gift), or they were resident in the UK in at least 17 of the last 20 tax years.
A person who receives a gift.
A person who gives property to another (the recipient being a donee) or a person who grants power to another (known as an attorney) under a Power of Attorney.