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New Discretionary Trusts

New Discretionary Trusts

Mr and Mrs Parker recently inherited some funds which they do not require, but wish to use to provide for their three children in the future.

Client Circumstances:

  • Mr and Mrs Parker inherited £500,000.
  • Have existing financial assets of their own.
  • Wish to provide funds for their 3 children in future, without giving full access to them.
  • They wish to maintain access to the capital for themselves if required.
  • Main objective is long-term capital growth.

Recommended Solutions:

  • Apply a Deed of Variation to Will to create Discretionary Trust - Mr and Mrs Parker and children as beneficiaries
  • Invest £500,000 into a Discretionary Trust.
  • Invest in an investment bond wrapper via a platform.
  • Provide diversified asset allocation, investing in the 4 main asset classes, being UK Equities, Commercial Property, Fixed Interest securities and overseas equity, diversifying investments in each sector across major funds.
  • Funds to be invested as per the Trustees’ attitude to risk.
  • Review and rebalancing of investments on a regular basis.

Benefits from advice given:

  • Provides for children’s future, without giving full access to the funds now.
  • Mr and Mrs Parker retain access to the capital under the Discretionary Trust if required.
  • As Trustees Mr and Mrs Parker retain control.
  • Meets the Trustees’ responsibility under the Trustee Act 2000.
  • Provides flexibility to assign segments of the bond to children if capital required.
  • Provides simple administration, reporting for Trustees.
  • Provides a highly efficient tax wrapper.
  • Avoids need for tax return by Trustees.
  • Avoids the capital forming part of their own estates for Inheritance Tax purposes.

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Future Servicing

We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.

This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.

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