Loan Plan Trust

Loan Plan Trust - The Loan Plan Trust is a simple arrangement that achieves two primary objectives:

  • Take ALL investment growth on the Trust assets outside the Estate for IHT purposes
  • Provide regular "income" via return of "capital" over the years

 

How is a Loan Plan Trust established and how does it work?

The Settlor makes a loan to the Trustees to establish a Trust Fund. The Trustees invest the capital they have been loaned into a suitable investment vehicle such as a single premium investment bond. The "beneficiaries" of the Trust would normally be the Settlor's children or family members.

During the lifetime of the Settlor the loan would be "repaid" via regular monthly withdrawals. On the death of the Settlor the outstanding loan would be repaid to the Estate and any growth on the investment would be considered outside the Estate for IHT purposes and available to the beneficiaries without the need for probate delay. Clearly, as the Settlor has made a "loan" to the Trust, the loan is repayable on demand. Therefore, the capital (less loan repayments made to date) can be "called-in" by the Settlor at any time.

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Who is the Loan Plan Trust suitable for? - The Loan Plan Trust is most suited to single people who would like to ensure that their investments do not grow further inside their Estate for IHT purposes.

Loan Plan Trust Summary

  • Suitable for single people wishing to take investment growth outside Estate for IHT purposes
  • Provide regular "income" via return of "capital" over the years
  • Retain access to capital (less withdrawals) - Loan repayable on demand

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