Flexibility in trust planning is becoming extremely important for a number of reasons. People are living longer, so there is less certainty over what money they will need to support them in later life. People may also need access to funds to help support a longer retirement, or need flexible access to pay for future goals, such as their children’s education. Unlike a Discounted Gift Trust, where the right to withdrawals is ring-fenced at outset and cannot be changed, the Lifestyle Trust offers greater flexibility to adapt over time according to an individual’s changing needs.
The Lifestyle Trust allows the settlor to determine the future dates when they may require withdrawals, and state the number of policy segments they may wish to access on each of these dates. As they approach each date, the settlor decides whether or not to take the entitlement. If the settlor takes the entitlement (or takes no action) the stated policy segments are moved into a bare trust and can be accessed immediately, at a later date, or assigned to a loved one. If the settlor decides not to take the entitlement, or postpones the entitlement to a later date, the funds stay within the trust, and will continue to be outside of the settlor’s estate for inheritance tax purposes.
Customer’s needs continually change, and the setting of these future dates can help provide a perfect opportunity for the financial adviser to revisit their customer and offer further financial planning at key points. These key points are likely to be linked to important life stages of the customer, such as children going to university or retirement, where further financial planning may be beneficial. There is also the flexibility to top-up the Lifestyle Trust at any point.
The Lifestyle Trust is available to customers who invest in either an Old Mutual Wealth bond in the UK or an Old Mutual International bond (from either Old Mutual International Isle of Man or Old Mutual International Ireland). Old Mutual International bond customers can also choose to use Old Mutual International Trust Company to run the Lifestyle Trust on their behalf, giving peace of mind that the assets will be dealt with in a professional and unbiased manner.
Rachael Griffin, financial planning expert, Old Mutual Wealth, comments:
“We are seeing growing demand for Inheritance Tax planning solutions with greater flexibility that can adapt to customer’s changing needs. The Lifestyle Trust offers the inheritance tax efficiency you would expect from a trust, with the added benefit of flexible access to funds in the future. This flexibility will help make trust planning more attractive to those who might otherwise see trusts as locking away their savings.”