Royal Skandia Best Start in Life Trust For Financial Adviser use only

Best Start in Life Trust Aimed at grandparents, aunts & uncles Financial help to support parents School fees University costs Deposit on house First car Wedding

dilemma Unlike a bare trust the benefits do not have to be paid out by a certain age! Is it a good idea to give a child an absolute entitlement at 18?! The 18-year-old dilemma

The Best Start In Life Trust ...also no stock market investment needed The Best Start In Life Trust Cash funds Bank accounts Here we provide some comfort that we are not insisting that people invest their monies into the stock market. However this is a trust and the trustees do have a duty to diversify and the Trustee Act 2000 must be adhered to at all times! Where I refer to case law and legislation in this presentation I will be referring to Manx Law as this is the law governing our trusts. However, Manx Law has in the main been established out of English Law, in many cases Acts are transposed verbatim. Where there is no case law or legislation in Manx Law, the courts will often look to English Law for precedents. Where I refer to non-Manx cases and Acts, I will confirm the relevant jurisdiction.

UK authorised unit trusts Investment selection We want to demonstrate that their regional business consultant can support them with portfolio construction and how the Financial Express independent system can help them in their day-to-day work. Structured products Exchange traded funds Cash deposits UK authorised unit trusts & OEICs UK investment trusts

The Best Start In Life Trust School fees are increasing above inflation The Best Start In Life Trust Mortgage deposits have increased in recent years University fees are typically around £8,900

Types of Trusts Discretionary Bare Flexible Fixed CLT - 7years PET - 7 years Taxation of bonds Taxation of bonds Settlor Beneficiary UK Trustees Unless parental trust £100+ UK beneficiaries

Assignments Remember minor cannot encash segments themselves If the Trustees encash within Discretionary Trust then tax on Settlor Remember minor cannot encash segments themselves If the trustees encash policies within a discretionary trust then the tax is on the settlor if still alive.

Appointment Original value £100,000 across ten policies 1 2 3 4 5 6 7 8 9 10 Grown to £150,000 across ten policies 1 policy is assigned to a bare Trust Trustees then encash the policy Chargeable gain = £15,000 - £10,000 = £5,000 (below personal income tax allowance, assuming no other income)

Types of Trusts Discretionary Bare Flexible Fixed CLT - 7years PET - 7 years Taxation of bonds Taxation of bonds Settlor Beneficiary UK trustees Unless parental trust £100+ UK beneficiaries

...who should be the trustees? Then the important question... ...who should be the trustees?

Ease of administration: Avoid personal/ family conflicts No need to open trust bank accounts Corporate trustees do not die: continuity Ease of administration: dealing, form-filling, trust records Independent impartial Corporate Trustees Professional: reduces shams and breaches Low cost fees deducted from bond Trust developments Central contact point Most of these points are self explanatory so let’s just pick out a few: Death of the final trustee would mean a requirement for probate and the appointment of a new trustees with personal representatives of the original trustee taking over in the short term. The lay-trustee can often inadvertently contravene trust rules and cause the trust to fail or be set aside. Professional trustees are more likely to successfully defend the claim of a sham or breach. Legislative developments often require changes to trusts. The lay-trustee may not be knowledgeable enough to make such changes. Non-UK resident trustees are often advantageous for tax reasons.

Royal Skandia Trust Company The professional trustee service which includes... The creation of the trust Additions to the trust fund Completion of forms and arranging the payment of any tax due under a discretionary trust Simple winding up of a trust Loan facility Distributions Yearly trust reviews Investment reviews The cost of the RSTC professional trustee service is £300.00 plus VAT. This fee covers most costs including initial set up, future top ups to the trust, loan of capital to beneficiaries, distribution of benefits to the beneficiaries, changes to the trust that are in the interest of beneficiaries, yearly review of investment performance against a benchmark and consideration of any ongoing payments out of the trust. There is an additional cost of £200 to cover administration should there be tax to pay on the 10-yearly anniversary ie. periodic charge. Trust wind up attracts a fixed fee of £300.00 plus VAT. £300.00 (plus VAT) annually in arrears £300.00 (plus VAT) £200.00

Royal Skandia Trust Company Trustee account included So client doesn’t have to open a separate bank account

Letter of wishes Can be updated at anytime during settlor’s lifetime Detail of settlor’s wishes following death A letter of wishes is a useful guidance document for trustees, especially following the death of the settlor and verbal guidance is no longer available. It is simply a letter setting the intentions of the settlor with regard to distribution of benefits to potential beneficiaries. It is not a legally binding document and trustees can choose to disregard the wishes if appropriate. Guidance may also be sought from the protector if trustees choose to disregard the wishes of the settlor. It may also be used to name a successor protector should the original person die or prefer not to act. Letter of wishes

Structured funds Exchange traded funds Royal Skandia Collective Bond Deposit accounts Unit trusts/ OEICs Royal Skandia Collective Bond Cash Unit trusts OEICs Investment trusts Investment trusts Our Collective Bonds are reasonably flexible and allow clients to hold a range of collectives from various fund groups as well as certain cash based protected funds plus certain bank account/deposits with third parties.

This presentation has been designed to be issued to authorised financial advisers. It should not be issued to or relied upon by existing or potential clients of Skandia. Skandia cannot accept responsibility for any losses arising from actions taken as a result of the information contained in this presentation. Further details of Skandia products can be obtained from the appropriate product guides which are available from any Skandia office. Calls may be monitored and recorded for training purposes and to avoid misunderstandings. www.skandiainternational.com Royal Skandia Life Assurance Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: Skandia House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0)1624 655 555 Fax: +44 (0)1624 611 715. Authorised and regulated by the Isle of Man Insurance & Pensions Authority. Authorised and regulated by the Financial Services Authority for business conducted in the UK. Some of the FSA’s rules do not apply to non-UK based insurers. FSA Register number 142309. www.fsa.gov.uk/pages/register. Royal Skandia Trust Company Limited is registered in the Isle of Man under number 095926C. Registered and Head Office: PO Box 142, Skandia House, King Edward Road, Onchan, Isle of Man, IM99 3DJ, British Isles. Phone: +44 (0)1624 655 456 Fax: +44 (0)1624 655 930. Licensed and regulated by the Financial Supervision Commission of the Isle of Man. Royal Skandia is a member of the Association of International Life Offices. INT12-0801/July 2012