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Administration details
The aims of the Wealth Preservation Bond are to:
• establish a trust fund outside the settlor's estate, free of inheritance tax
• provide a regular annual payment of capital and accumulated income
Type of policy
The Wealth Preservation Bond is a series of unit-linked, single premium life assurance policies issued by Canada Life Limited.
The legal ownership of the policies are assigned into a bare trust (the “Initial Trust”). The investor (settlor of the Initial Trust) then gifts all of the rights and benefits of each of the policies into a discretionary trust (the “settlement”). The transfer into the settlement is a Chargeable Lifetime Transfer (CLT).
Ownership
Single ownership only
Owner age limits
Minimum age at entry - 18 years
Maximum age at entry - 89 years
Life assured age limits
Minimum age at entry – 3 months attained
Term
For added flexibility, the Bond can be divided into clusters of separate policies. Each policy must mature no later than the policy anniversary following the youngest life assured's 101st birthday.
Minimum investment
Minimum initial investment is £50,000. Minimum additional investment is £10,000 (this will be as a new trust and policy). The minimum investment into each cluster is £2,000.
Allocation rate
The following allocation rates are a percentage of the investment (at the offer price) and can be increased further if commission is rebated.
Youngest life aged 80 and under
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Youngest life aged 81 to 85
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Youngest life aged 86 and over
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100.0%
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99.5%
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99.0%
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Charging structure
Bid/offer spread of 5% with a small rounding adjustment of not more than 1%. An annual management charge of 1% per annum, deducted from the fund on a daily basis. An annual investment management charge, which varies according to the fund.
Funds
The funds available are Life series 3 (and premiums purchase accumulation units).
Funds per policy
There is a maximum of 10 funds at any one time, per policy. The fund selection for a cluster of policies must be identical.
Switches
The first switch of existing allocations for the Bond in each policy year is free. Thereafter a charge of £25 applies. This may increase in the future.
Surrender values
Each individual policy may be surrendered by the trustees of the Initial Trust, for the benefit of the beneficiaries, at any time before the maturity date. Partial surrenders are not permitted. The settlor can also benefit from the income tax deferral benefits of single premium life contracts.
Death benefit
The amount paid on death will be 100.5% of the bid value of the units allocated at the next available date of the funds following receipt of written notification of death.
Extension option
The trustees may extend the term of each individual policy, subject to the latest maturity date being the policy anniversary prior to the youngest life assured's 101st birthday.
Maturities
Sixty days prior to the maturity date of each policy number, we will write to the first trustee of the Initial Trust with Maturity Option Forms to complete and to liaise with the other trustees to sign. The maturity date can be extended or the policy value taken. The completed maturity form must be received prior to the maturity date.
New business requirements
Please ensure that the following items are completed before submitting to Canada Life:
• Application form and settlement
• Cheque
• Money laundering certificate(s) and certified copies of evidence. The certificate can be downloaded via our library. A certificate is required for each owner plus each trustee and attorney, if applicable.
• Personal example, which advises the funds, cluster size and the commission basis.
The information regarding taxation is based on our understanding of current legislation, which may be altered and depends on the individual financial circumstances of the investor. Please note that past performance is not a guide for the future. The value of units can fall as well as rise and currency fluctuations may also affect performance.
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