Discounted Gift Trust

Discounted Gift Trust (DGT)- If you want to reduce or avoid IHT completely, but still need an income from your investment, restructuring your existing investments into a Discounted Gift Trust arrangement may be the answer.

  • An IMMEDIATE reduction in your potential IHT liability
  • Entire fund OUTSIDE your Estate after 7 years
  • Regular "income"over the years

 

How is the Discounted Gift Trust established and how does it work?

dgt

  • The Settlor(s)establishes a Discounted Gift Trust for the benefit of the Beneficiaries via a deed. The Trustees make an investment into a suitable investment vehicle.
  • The Trust fund is notionally split into two parts, the "Retained" fund and the "Gifted" fund.
  • The "Retained"fund is deemed to be outside the Settlor's Estate in DAY 1 for IHT purposes.
  • The "Gifted" part of the fund, dependant on how the DGT was set up would be deemed as either a Potentially Exempt Transfer (PET) or a Chargeable Lifetime Transfer (CLT).
  • Reguar income is paid to the Settlor from the entire fund including investment growth.
  • All growth is OUTSIDE the Estate for IHT purposes.

Who is the Discounted Gift Trust suitable for? - The Discounted Gift Trust is suited to either single people or married couples who would no longer need access to their capital and would like to reduce or avoid IHT on their investments.

Discounted Gift Trust Summary

  • Part of Trust fund deemed OUTSIDE Estate for IHT purposes from DAY 1
  • Remainder of Trust Fund OUTSIDE Estate after 7 years
  • All investment growth OUTSIDE Estate
  • Regular income payments
  • Loss of access to capital

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