Gift Trust


The Gift Trust represents the simplest form of Inheritance Tax planning in that the Settlor passes property by way of a gift, to the trustees for the benefit of chosen beneficiaries and the trust is available as a Bare or Flexible Trust. Some individuals will have an aversion to making substantial gifts directly to their children. For example they may want the children to inherit the money at a later age when they are more financially mature or they may want to gift away money without it affecting the spouse’s access to the funds. This trust will allow an individual to make a gift without relinquishing full control over the monies.

General Features of the Trust

  • The trust can be established with single or joint settlors.
  • The settlor is not a beneficiary.
  • The trust can be used for existing or new policies.
  • The trust can accept top-ups.
  • The trust will avoid Manx Probate assuming there is a surviving trustee alive at the time of the death of the last life assured on the policy.

The Gift Trust might be suitable for individuals who:

  • Are UK or deemed UK domiciled for Inheritance Tax purposes.
  • Can afford to gift away capital with no requirement for future access.

Establishing the trust as a Bare Trust might be suitable for individuals who:

  • Wish to create a potentially exempt transfer for IHT purposes.
  • Wish to avoid reporting requirements to HMRC and who
  • Have specific beneficiaries in mind.

Establishing the trust as a flexible trust might be suitable for individuals who:

  • Wish to create a chargeable lifetime transfer for IHT purposes.
  • Wish to retain flexibility as regards their future choice of beneficiary.

Important Notes

Please note that every care has been taken to ensure that the information provided is correct and in accordance with our current understanding of the law and Her Majesty's Revenue and Customs (HMRC) practice as at July 2010. You should note however, that we cannot take on the role of an individual taxation adviser and independent confirmation should be obtained before acting or refraining from acting upon the information given. The law and HMRC practice are subject to change. Legislation varies from country to country and the policyholder's country of residence may impact on any of the above.