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Thanks once more. So, I'm coming to the conclusion that I'll write these FIBs in trust.
Is there the possibility of some tax charge if one or both of us dies during the first 10 years of the thing? I thought the whole idea of a trust was to avoid tax, although I'm now realising it's a way to minimise it, rather than avoid it.
Thanks once more. So, I'm coming to the conclusion that I'll write these FIBs in trust.
Is there the possibility of some tax charge if one or both of us dies during the first 10 years of the thing? I thought the whole idea of a trust was to avoid tax, although I'm now realising it's a way to minimise it, rather than avoid it.
Minimise, not eliminate, exactly! In a lot of instances advisers don't talk about these charges not only because they aren't relevant but in my experience because a lot of them aren't aware of them.
Family Income Benefit plans are more complex than a standard level term assurance as a level term plan could be paid into a trust and then the excess above the £325,000 nil rate band could simply be withdrawn before a 10-year anniversary leaving no charge. Obviously, this can't be done with the FIB unless you wish to commute the benefit to a lump sum which defeats the purpose of the cover to a degree. Still a 6% charge is better than a possible 40% IHT charge
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