The company said three options will now be available to trustees so they can facilitate payments to advisers without impacting on the ability of the trust to function as it should.
These three new options are:
- Initial adviser payments before the policy is set-up
- Ongoing adviser charge payments as a monetary amount or a percentage of the value of the account
- Minimum and maximum monetary limits to be set for ongoing adviser charge payments which are taken as a percentage
CLI said the changes are backed by Counsel’s Opinion to “ensure that the availability of adviser charge deductions will not compromise the effectiveness of the trust”.
Explaining the need for the amendments, CLI said where it had previously been possible for the adviser to be paid on a trail or commission basis the introduction of the RDR on 31 December last year meant this was no longer the case.
With regards more specifically to trusts, CLI said while the settlor can pay for the advice given to trustees, this may be classed as a further gift for inheritance tax purposes, potentially using up any gift allowance or being an exempt transfer or even chargeable lifetime transfer. CLI added that this also could commit the settlor to gifting for many years and while one settlor may not mind this commitment, it may discourage others.
CLI managing director Sean Christian said: “The availability of an ongoing adviser charge facility is a key option when an adviser considers a discounted gift trust provider. The availability of an ongoing adviser charge allows the trustees to pay for the advice they receive.
“We believe that we are currently the only offshore company who can offer such a wide range of adviser charging payment options on discounted trust arrangements. Not only can we offer initial adviser charging before policy set-up as either a monetary or percentage amount but we also have flexible ongoing adviser charge deductions, again including monetary and percentage amounts as well as minimum and maximum limits.”
