Offshore Bond In a Trust fund

Mothman

Some years ago my Mother took out an Offshore Bond which is held in an Interest in Possession Trust with my brother & myself as beneficiaries. I understand that it is possible for the bond to be assigned to my brother and myself, either by my Mother whilst she is still living, or by the Trustees after her death so that the whole bond or segments thereof can be cashed in the most tax efficient way at a time of our choosing.

As a higher rate tax payer I was wondering if it would then be possible for me to assign segments of my portion of the bond to my wife who has no income so that her tax allowance can be utilised or would my wife need to be mentioned as a beneficiary in my Mothers will for this to be possible?

HappyHarry

Mothman wrote: »

Some years ago my Mother took out an Offshore Bond which is held in an Interest in Possession Trust with my brother & myself as beneficiaries. I understand that it is possible for the bond to be assigned to my brother and myself, either by my Mother whilst she is still living, or by the Trustees after her death so that the whole bond or segments thereof can be cashed in the most tax efficient way at a time of our choosing.

As a higher rate tax payer I was wondering if it would then be possible for me to assign segments of my portion of the bond to my wife who has no income so that her tax allowance can be utilised or would my wife need to be mentioned as a beneficiary in my Mothers will for this to be possible?

Once the bond, or segments of it, are in your name, your Mother's involvement ceases.

You could then assign the bond (or segments of it) to your wife for her to surrender tax-efficiently. If the assignment of the bond to your wife was a gift from you, and you were not to receive any benefit from it, then this would be all above board.

However, this assignment to your wife would technically be a chargeable event if you would later benefit from the proceeds. This is because the assignment would be an assignment "for money's worth".

I have not known HMRC to challenge such a situation between a married couple, but the rules exist and are clear.

Mothman

HappyHarry, thank you for the detailed reply it is most helpful.