How does ongoing adviser charging operate on trust cases where an investment bond is the only asset?04 December 2014
The first consideration is that any ongoing adviser charge payment made from the investment is a withdrawal across the policy and may be covered by the 5% tax deferred allowance. A chargeable event may occur if withdrawals are already set at 5% and an adviser charge is paid.
The second consideration is who is receiving the advice? The settlor cannot benefit from the trust as this would be classed as a gift with reservation of benefit. If the adviser is advising the settlor, an adviser charge taken from the trust and paid to the adviser would be treated as a gift with reservation of benefit.
If the advice is given to the trustees, then the ongoing adviser charge can come from the investment without any gift with reservation issues, it’ll simply be a trust expense.