Aviva has announced the launch of its new flexible reversionary trust (FRT) on its adviser platform to support inheritance tax (IHT) planning.

The FRT adds to the six existing trusts available from Aviva and was developed following feedback from advisers, who identified it as a key tool in efficient IHT planning for them to offer to their clients.

It has been designed to work with Aviva’s new platform-integrated onshore bond, seeking to enable efficient long-term financial planning.

Aviva said the FRT offered clients a flexible way to gift money into a trust while retaining the option to receive capital payments in the future.

These payments are scheduled at fixed points, although clients can defer or forgo them through their trustees if they no longer need the funds.

The discretionary trust structure allows the client to defined classes of beneficiaries within the trust deed, while additional beneficiaries can be added at a later date, and clients select independent trustees who will have ‘a level of control’ over how and when benefits are distributed.

Aviva said that this offers benefits for IHT planning, as clients retain access to their capital and can receive capital payments when individual policy segments vest, and these can be scheduled in advance and deferred or overridden by trustees.

This helps reduce the value of their estate for IHT purposes while allowing access to capital if required.

If the client lives for seven years from the date of the chargeable lifetime transfer, the full value of the Aviva onshore bond can fall outside their estate for IHT.

“Advisers told us that FRT is a key tool for their clients when they are building in efficiencies for IHT, particularly since the announcement of the changing tax treatment of pension pots,” commented Aviva advised platform director, Lorna Whalley.

“This trust significantly enhances our existing choice of trusts, so that advisers can be confident they can recommend the best solutions for their clients’ needs.

“The launch comes with technical material and support for advisers. As well as the usual BDM support, we are also running technical webinars next month and we have a suite of technical and marketing support available on our website.

“We look forward to seeing the progress of this new trust, particularly following the recent addition of our smooth managed fund, over the coming months.”

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