Discretionary trust – settlor excluded

This type of trust can be suitable for inheritance tax (IHT) planning as it moves the client’s assets outside of their estate for IHT purposes - if they survive seven years after making the gift (unless an exemption applies).

Often used by families for succession planning, the wide class of beneficiaries means spouses, along with existing and future children and grandchildren, are included automatically. If the classes of beneficiaries do not include individuals who the client would want to benefit, they can be added to the trust deed.

The settlor cannot benefit from the trust; therefore it would be unsuitable for a client who requires income or access to capital.