InvestmentsFeb 3 2016

OMW unveils IHT trust

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OMW unveils IHT trust

Old Mutual Wealth has launched a highly flexible trust that aims to help clients with their inheritance tax planning.

Clients can decide on dates in the future when they might wish to withdraw segments from the trust, and can decide whether or not to take the entitlement as they approach each date.

Policy segments can either be accessed immediately, at a later date, or assigned to a loved one.

There is also the flexibility to top-up the Lifestyle Trust at any point.

If an entitlement is postponed, the funds stay within the trust and remain outside of the policyholder’s estate, and therefore will not incur an inheritance tax charge.

The Lifestyle Trust is available to customers who invest in either an Old Mutual Wealth bond in the UK or an Old Mutual International bond.

Old Mutual International bond customers can also choose to use Old Mutual International Trust Company to run the Lifestyle Trust on their behalf.

Adviser view

Colin Low, managing director of Essex-based Kingsfleet Wealth, said that at first glance the Lifestyle Trust looks similar to the Canada Life Wealth Preservation Account, which was “a really good scheme”.

He added: “Old Mutual is obviously very aware that estate planning is coming back into the market, in the sense that property prices are rising and everyone is beginning to understand the new inheritance tax rules now.”

He pointed to fresh exemptions announced by Chancellor George Osborne during his Summer Budget, and said now clients had a degree of certainty around which they could base their planning.

He said: “We have used the Canada Life version for a number of clients and it is very effective and very simple. The only problem is when the trustees are based outside the country and need to sign the paperwork.

“It is not for everybody, but for the type sort of client – probably those who are pretty cash-rich – to be able to use a trust as part of their retirement planning is not unreasonable.”

katherine.denham@ft.com