Friends Provident International has launched two new trusts designed to help individuals mitigate UK inheritance tax. Absolute Discounted...

Friends Provident International has launched two new trusts designed to help individuals mitigate UK inheritance tax. Absolute Discounted Gift Trust: designed for individuals who wish to reduce IHT liability on death, while continuing to receive an income from their investments; and Absolute Loan Trust: designed for investors who wish to reduce IHT liability on death, while still retaining access to the original capital. Both are written on an absolute, or bare, trust basis and are designed to avoid the new, complex tax regime that was extended to most lifetime settlements by the Finance Act 2006. Their key distinguishing features include: · The ability to carve out entitlement to a series of capital payments, while reducing the value of an estate for IHT purposes. · No liability to the initial, ten-yearly or exit charges to IHT that have been introduced for flexible trusts. · No need to complete the IHT100 form on creation of the trust. Brendan Harper, technical services manager at FPI, said: "The Finance Act 2006 introduced a complex IHT regime that will apply to those who make substantial gifts to lifetime flexible trusts. The new FPI Trusts are unaffected by these rules, and are therefore suitable for clients who wish to mitigate IHT on larger lump sums, or who wish to keep their planning as simple as possible. The new plans will sit alongside the existing flexible versions".