18 to 25 Trust
The father of Louise and Mathew has died, leaving them benefits in his Will.
- Louise and Matthew aged 11 and 14 respectively.
- The Will specifies entitlement at age 25 equally.
- Estate assets are £372,000 cash from investments.
- Trust Income Tax is confirmed as 45% on Interest and 37.5% on deposits excluding the £1,000 lower rate Band).
- Trust Capital Gains Tax is confirmed at 28%.
- Trust CGT allowance £5,500.
- No income required initially from the Trust.
- Emergency Reserve Fund provision to be held in a Trustee bank account £20,000.
- Remainder of £352,000 to be invested in an offshore investment bond.
Benefits from advice given:
- Income and Gains are rolled up Gross (tax free).
- No tax is paid within the Offshore Investment Bond.
- Policy denominated in British Pounds.
- Investments within the Offshore Bond are diversified across the main asset classes to match the model portfolio for the Trustees’ attitude to risk.
- A pooled investment by a packaged tax wrapper.
- Ability to access specialist funds.
- Ability to withdraw up to 5% of the initial invested sum per annum without tax consequences.
- Investment can be transferred at age 25 by ‘assignment’.
- Investment can be encashed by the beneficiary children.
- Children are taxed on encashment at their own Income Tax rates from 0% to 45%.
- Income and Growth as well as tax has been accumulated until investment is encashed.
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This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.