Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

Using Trusts to gift money

Trusts make it possible to make gifts to others while keeping control over these gifts. Usually when you set up a Trust you can choose who receives the benefits and when.

With certain Trusts you can also make gifts while continuing to benefit from these funds in some way.

Gifting to people who cannot look after the money themselves

One of the main benefits of Trusts is the extra control that you keep over the money. This is useful if you want to make a gift to someone who might be unable to look after it for themselves. This could be because:

  • They are too young
  • They lack interest or experience in looking after money
  • They are disabled or in ill health
  • They are going through bankruptcy proceedings. In these cases it may not be ideal to make the gift directly.

However, with a Trust you could make the gift while keeping control over how, when and in what circumstances it is received.

Making gifts while taking an income

Some Trusts allow you to give money away while also taking an income from it through regular withdrawals. You can decide how much money you would like to withdraw and how often, but once the trust is set up you cannot change your mind. The remainder will be paid to the beneficiaries of the trust upon your death.

Speak to a Financial Advisor

Using gifting to reduce Inheritance Tax

Part of the amount gifted will immediately fall outside of your estate for Inheritance Tax purposes, with the remainder leaving your estate completely after seven years.

The rules can be particularly complicated so you should consider speaking to a qualified financial planner if this is something you are interested in.

Keeping an investment while giving away the growth

Another option is to ‘loan’ an investment into Trust and have any future growth built up paid as an income for the beneficiaries. You can choose who receives the growth and when it will be paid. You are also able to request the return of the outstanding ‘loan’ at any time.

The original investment, minus any repayments of the original ‘loan’ made during your lifetime, will still count as part of your estate for Inheritance Tax purposes, but any future growth will belong to the beneficiaries and is immediately outside your estate. This makes it a good option if you want to help the next generations but aren’t ready to give away your money completely.

A Trust can be set up right away or you can establish a Trust in your Will. Find out more about Trusts.

Tax rules around Trusts are complicated and it is important that you seek Financial Advice.

How to set up a Trust

At Four Wealth Management, one of our qualified Financial Advisers will be work with you to determine if a Trust is suitable for your circumstances.

Book a no-obligation meeting today with one of our advisers to see if you could benefit from using a Trust.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Please note that if income taken exceeds the growth on the bond of the capital value will be eroded. Please note that if withdrawals exceed the growth on the bond the capital value will be eroded. You are not certain to make a profit.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

Enquire Now

If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

The Partner together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner's Privacy Policy or the St. James's Place Privacy Policy.

Share this article

Share on google
Share on linkedin
Share on print
Share on email