Prudence Inheritance Bond

A creative approach to inheritance tax planning

Prudence Inheritance Bond is a discounted gift plan with a difference. Its design can provide some valuable benefits:

• Flexibility of withdrawals
• Natural income
• Potential income tax benefits

These special features are in addition to the benefits that a standard Discounted Gift Trust can provide.

Prudence Inheritance Bond produces Natural Income; which is income generated from the investment. Clients are able to access this without eating into the capital they have gifted.

Your clients can take their natural income every three months or reinvest these to take fixed regular payments. Not only that but if your clients' needs change, they can change their withdrawal option. However, your client can decide not to take any income at all.

Furthermore, the structure of the bond, means there is unlikely to be a chargeable event gain on death, therefore providing savings on income tax.

The bond can be written under an absolute trust or a discretionary trust. With an absolute trust the beneficiaries and their share cannot be changed once the trust has been set up, but the proceeds will be completely free of IHT if the client survives for seven years. With a discretionary trust, the trustees can pay the benefits to any potential beneficiary, but there may be immediate, periodic and exit tax charges and there are also reporting requirements.

For more information, please use the literature links below.

The above is based on our understanding as at April 2011 of the current taxation, legislation and HM Revenue & Customs practice, all of which are liable to change without notice. The impact of any taxation (and any tax reliefs) depends on individual circumstances.

Full terms and conditions are available on request.