Scot Eq trust allows regular withdrawals

Scottish Equitable International is launching a Reserved Interest Trust, which allows investors to t...

Scottish Equitable International is launching a Reserved Interest Trust, which allows investors to take regular withdrawals from an insurance bond without incurring inheritance tax (IHT). The plan sets up a trust through which the trustees buy an offshore bond, with the client deciding in advance to take a regular withdrawal of 5% per year for 20 years. Under current legislation, this withdrawal is not subject to an immediate liability to income tax. For inheritance tax purposes, this income stream is treated as a potentially exempt transfer and will be outside the investor's estate if...