Scottish Life International Launches New Loan Trust
Friday, 13 April 2007
Scottish Life International has introduced a revamped Loan Trust. The Loan Trust is designed for those individuals who want to undertake inheritance tax planning but do not want to make significant outright gifts.
In practice, the Loan Trust works by an individual establishing a trust from which he/she is excluded from all benefit: he/she is the settlor. He/she provides his/her selected trustees with funds by way of a loan. This is interest-free and repayable on demand. The trustees then invest the loan proceeds in a Scottish Life International bond. Growth on the bond is held by the trustees for the beneficiaries (basically the settlor's extended family) and is not in the settlor's inheritance tax estate.
The settlor can get repayment of his/her loan, wholly or in part, as desired. Repayments are funded by part-surrenders of the bond. When or if the loan is fully repaid, the settlor's ability to access the trust fund ends. The trustees then hold the fund solely for the beneficiaries.
Alan Blackburne, Scottish Life International's Head of UK Sales commented:
"The Loan Trust concept has been around for many years. It successfully sidesteps the income tax charge on pre-owned assets and establishing such a trust does not trigger an inheritance tax chargeable lifetime transfer.
"The Loan Trust is an extremely flexible inheritance tax planning tool and the support material available from Scottish Life International will enable independent financial advisers to exploit this flexibility to the full."
– ENDS–
for further information please contact:
Scottish Life International
Alan Blackburne
Head of UK Sales
Tel: 01296 660 980
Mobile: 07919 171 604
alan.blackburne@sli.co.im
Gerry Brown
Technical Manager
Tel: 0131 456 6024
Mobile: 07919 171 587
gerry.brown@sli.co.im
Editors notes:
Scottish Life International was launched in 1996 and is now part of the Royal London Group. The company has grown rapidly in size and now has funds under management in excess of £730 million from investors in the UK and around the world (as at 31 December 2006). Scottish Life International is based in the Isle of Man, where it is supervised by the Isle of Man Government Insurance and Pensions Authority.
Scottish Life International is a member of the Association of International Life Offices (AILO) and sponsors IFA Promotion (IFAP), which supports the need for independent financial advice.
Holders of policies issued by Scottish Life International Insurance Company Limited, based in the Isle of Man, will not be protected by the UK Financial Services Compensation Scheme if the company becomes unable to meet its liabilities to them. Policyholders will however be protected by the Isle of Man Life Assurance (Compensation of Policyholders) Regulations 1991.
Royal London Group is a specialist financial service provider. Its businesses focus
on those sectors of the market which value premium propositions, operating through
a number of brands:
• Scottish Life - UK pensions market
• Bright Grey - UK protection market
• Scottish Life International - offshore investment markets
• RLAM - fund management
• RLAS - life and pensions administration
Royal London is one of the stronger life and pension companies in the UK, and has a particularly strong track record for with profits performance.
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £30.8 billion. Group businesses serve over three million customers and employ 2, 640 people. (Figures quoted are as at 31 December 2006.)
The draft deed is available as a specimen only. Details are based on Scottish Life
International's current interpretation of UK taxation law and practice which may be
affected by future changes in UK legislation. Specialist tax and legal advice should be taken before any tax strategy is implemented.
Issued by Scottish Life International Investment Group Limited, a Royal London company which is authorised and regulated by the Financial Services Authority. Registered in Scotland number 166387. Registered office: 19 St Andrew Square, Edinburgh EH2 1YE.