The Select Lifestyle Bond is a simple, flexible and cost effective trust-based solution designed to help customers achieve a balance between access to capital, inheritance tax planning and control over the future distribution of assets.
Trusts that offer flexibility are becoming increasingly important. As people are living longer, there is less certainty over how much money they will require to support them in later life. This can create a dilemma between having access to the assets placed in trust, while still being able to efficiently pass wealth to the next generation.
A key benefit of the Select Lifestyle Bond is that it allows customers to access a pre-agreed proportion of the trust fund for their own future use, but as they approach each payment date they can make the decision on whether or not to take the entitlement. If the customer decides not to take the entitlement, or postpones the entitlement, the money stays within the trust and will continue to be outside their estate for inheritance tax purposes.
This makes the Select Lifestyle Bond highly efficient from an inheritance tax planning perspective, while the high level of flexibility around future entitlements makes the solution appeal to a wider audience.
An added benefit of the Select Lifestyle Bond is that Old Mutual International Trust Company, a leading corporate trustee, will automatically be appointed to run the trust. The Trust Company removes the administrative burden from the customer (settlor), and will give them advance warning of any entitlement, with enough time to decline the payment if it is not required.
The Select Lifestyle Bond offers all the benefits of the new Select Bond launched earlier this year. It offers a simple, transparent and competitive charging model, with no initial, dealing or transaction charges. It also offers lower premiums of just £20,000, making the solution accessible to more customers.
Peter Kenny, Managing Director, Old Mutual International, comments:
“At a time when offshore bonds for UK customers are becoming increasingly important, we continue to lead the market with our focus on new innovative solutions. Advisers and customers want simplicity, value, transparency and flexibility, and this new Select Lifestyle Bond combines the successful elements of the Lifestyle Trust with the Select Bond to form a truly compelling solution.”
Rachael Griffin, Head of Trusts & Technical Solutions, Old Mutual Wealth:
“With the increase in life expectancy and growing care costs, it is becoming more difficult for people to predict what their income requirements might be in the future. Trusts which provide flexibility to adapt to the customer’s changing needs, enabling them to choose whether or not to take withdrawals from the trust, will undoubtedly grow in popularity, and help break-down the barriers that people may have to using a trust-based solution.”