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04/10

Royal Skandia Trust Company enhances its Loan Trust offering

Royal Skandia Trust Company, the IOM based professional trustee and part of Skandia International, extends its range of Inheritance Tax solutions by launching an Enhanced Loan Trust.

04 October 2011

Royal Skandia Trust Company, the IOM based professional trustee and part of Skandia International, extends its range of Inheritance Tax solutions by launching an Enhanced Loan Trust.

The key benefit of the Enhanced Loan Trust (ELT) is that it provides investors with the flexibility to accommodate a future change of circumstances such as waiving all, or part of, any outstanding loan.

A Loan Trust offers an individual the ability to make an interest free loan repayable on demand, the proceeds of which are placed in a single premium investment bond with Royal Skandia, written in trust for the chosen beneficiaries. Any growth in the value of the loan would fall immediately outside the individual’s estate and therefore exempt from IHT.

With the Enhanced Loan Trust, the Trustees will prompt a review of the lender’s circumstances as part of the regular review processes to establish whether the lender wishes to waive all or part of the loan to beneficiaries.

By additionally exploiting the range of available IHT exemptions such as efficiently utilising the unused annual allowances and making further gifts of the loan to the beneficiaries trust, the ELT could play a key part in significantly reducing the lender’s IHT liabilities.

Rachael GriffinRachael Griffin, head of product law and financial planning at Skandia International, comments:

‘We recognise that a client's financial situation changes throughout their lifetime. The Enhanced Loan Trust utilises a professional trustee service which will ensure that the client revisits their financial position and, with assistance from their adviser, makes use of inheritance tax exemptions or provides for large gifts to be made, with maximum efficiency’.

A recent survey* conducted by Skandia International has identified the key uses for trusts to be: mitigation of IHT liabilities, asset protection and control over who would benefit, with 60% of offshore advisers stating these reasons.

The arrangement, which is currently available as part of a special offer**, can additionally be structured as either a discretionary or as a bare trust, and is offered by the Royal Skandia Trust Company. Based on the Isle of Man, it offers a professional and independent trustee service, thus providing the investor with the peace of mind that the assets of the trust will be dealt with in an unbiased manner and in accordance with their wishes.

* The survey looked to assess some of the key aspects which form part of the advice process. It was carried out in July 2011, attracting responses from over 330 advisers from around the world – Hong Kong, Singapore, Dubai, UK, Europe, Africa and Latin America
** Royal Skandia Trust Company has removed the annual fee of £300 +VAT for the life of any new trust taken out until the 31st December 2011. The offer applies to all new Royal Skandia applications received during this period that have premiums of £200,000 or more where a Royal Skandia Trust Company trust is utilised.

This press release is for journalists only and should not be relied upon by financial advisers or customers.