Novia makes available the product wrapper administration and
legal documents, technical guides and other paperwork necessary to
use a wide range of trusts via the service. These currently
include:
To access the documentation necessary for these trusts please go
to the literature page of the Novia adviser extranet. For access please speak to one of our Regional Sales
Managers.
Novia offers no advice regarding trusts, use of trusts via the
service or the tax treatment of trusts and any implications this
may hold. You should always seek professional tax and legal advice
when using trusts.
Trusts - introduction
Trusts may be used in a wide variety of different situations and
for different reasons. They can be a very useful tool in tax
planning, the passing on of assets to others and the organisation
of an individual or family's affairs in a number of different
situations. They can enhance the benefits of an investment and may
be used for example to:
- Protect capital for future
generations
- Provide for children without
giving them control over assets
- Protect assets from
creditors
- Make provision for relatives or
vulnerable individuals
- Reduce income, capital gains or
inheritance tax
What is a trust and what are the terms used?
A trust is way of setting up a means of managing or distributing
wealth in a particular way. A person who sets up the trust for a
particular purpose is the settlor and those that administer the
trust are known as the trustees. The trustees have a legal
obligation to implement the trust for the benefit of one or more
'beneficiaries'.
- Settlor - the settlor creates the
trust and puts property/wealth into it at the start, often adding
more later. The settlor says in the trust deed how the trust's
wealth should be used.
- Trustee - Trustees are the 'legal
owners' of the trust's wealth and must deal with it in the way set
out in the trust deed. They also administer the trust. There can be
one or more trustees.
- Beneficiary - this is anyone who
benefits from the property held in the trust. The trust deed
may name the beneficiaries individually or define a class of
beneficiary, such as the settlor's family.
- Trust property - this is the
property (or 'capital') that is put into the trust by the settlor.
It can be anything such as land or buildings, antiques or other
valuable property, or as may be used through Novia, money and
investments.
Trusts and the Novia Gross Nominee
The following trusts can access the Novia service via the gross
nominee (product wrappers such as the Gross GIA) - this means that
interest distributions from investments and interest on cash can be
paid gross of tax - potentially improving performance and cutting
down paperwork for reclaims. For more information please speak to your Regional Sales
Manager.
Trusts available through Novia
This trust aims to mitigate inheritance tax on an investor's
SIPP death benefits.
Lump sums death benefits are generally free of inheritance tax
if made within the two year period following death. Whilst this is
welcome for the recipient, unless the cash is spent during that
beneficiary's lifetime, on their subsequent death it could be
potentially subject to inheritance tax. This problem is likely to
be particularly acute where the beneficiary is the member's
surviving spouse.
A SIPP By-Pass Trust seeks to overcome this problem. If
the By-Pass Trust is established during their lifetime and death
benefits (before the pension benefits have commenced or while in
payment as an unsecured pension before age 75) are paid to the
trust rather than to a beneficiary, it will be possible to mitigate
any future potential inheritance tax liability on the lump sum
-without necessarily denying the spouse access to the trust
assets.
This is an international retirement benefit scheme. The Trust
allows United Kingdom Limited Companies to establish bona fide
retirement benefit packages for employees who have duties outside
the United Kingdom.
The Trust can offer a number of combined benefits,
including:
Employer contributions are allowable against UK corporation tax,
employer contributions are permissible and generous contribution
levels permitted by the Pension Scheme Office
There is usually no employee tax liability, usually no social
security costs for employer and employee and individuals and their
adviser can select their own investment profile in a tax efficient
environment
The Trust allows individuals to control and manage their
exposure to local taxation and social security on their total
remuneration package.
The aim of the Bare Gift Trust is to facilitate effective
lifetime inheritance tax (IHT) planning. Potential users of the
Bare Gift Trust could be new investors contemplating investment in
collective investments such as unit trusts or existing investors
already holding such investments either on or off the Novia
service.
As far as gifts into trust during lifetime are concerned, only
gifts into bare trusts or into certain trusts for the disabled are
still treated as potentially exempt transfers - therefore this can
be a powerful IHT planning tool for advisers and their clients.
- Bare Trust (Donor Enabled)
The main objective of the Bare Trust (Donor Enabled) is for a
non-UK resident investor to establish a trust that is for his
absolute benefit and which facilitates an investment on the Novia
service.
The legal owners of the investment will then be the Trustees
which will mean that, provided the Donor has signed the relevant
tax form, gross interest can be paid to the account held by the
Trustees on the Novia service.
The Discretionary Gift Trust provides a way for an
investment such as a Novia Offshore Bond or GIA to be held on
the platform for the benefit of another individual or
individuals.
