The Flexible Future Benefit Trust is aimed at both retirees and those saving for retirement and presents a useful tool for advisers seeking to help clients plan for future eventualities.
The product is structured as a reversionary interest (or gift) trust, which allows investors to make gifts to the trust, while retaining access to a series of future capital entitlements.
It is used with an offshore bond and therefore means clients will benefit from gross roll up on the underlying investments, the ability to shelter capital from inheritance tax in the event of their death and the flexibility to defer scheduled capital payments to a future date, without any inheritance tax consequences. Additionally, policies can be assigned to lower tax paying beneficiaries.
FPI said, unlike other products in the market which are combined with an offshore bond, it allows investors to top up their investment. The company explained this would be particularly useful for those who will be impacted by the reduction in the annual and lifetime limits due to happen next week.
In order to provide these benefits, the trust can be split into segments which can be encashed, or indeed deferred, at set periods during the client’s lifetime. This means, if a client had planned to encash a set amount at a designated time, but then inherited, they could defer the payment and keep it within its tax efficient wrapper.
Irvine Baxter, UK regional sales director at FPI said: “The Flexible Future Benefit Trust offers flexibility unrivalled by other trusts in the market place and meets the needs of the growing number of people affected by inheritance tax and the reduction in the pensions annual and lifetime allowances. It will appeal to those planning for retirement as well as those now enjoying it.
Baxter added that the level of sophistication within the new product creates a real opportunity for advisers to justify a fee-paying advice model.
FPI said the launch of the product follows the success its Future Benefit Trust, which won Best New Product in the offshore category at International Adviser's International Life Awards 2013.
