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Old Mutual Intl takes balanced approach with UK bond

Old Mutual International (OMI) has launched a trust-based bond that looks to balance access to capital with inheritance tax planning and give control over the future distribution of assets.

Where next for bond flows?


The proposition is called the Select Lifestyle Bond and combines the company’s Lifestyle Trust with its Select Bond solutions.

OMI says the trust-based bond is attractive for customers and advisers as it offers it offers flexibility.

“As people are living longer, there is less certainty over how much money they will require to support them in later life,” OMI said in a statement.

“This can create a dilemma between having access to the assets placed in trust, while still being able to efficiently pass wealth to the next generation,” the company said.

Key benefits

A key aspect of the Select Lifestyle Bond is that is allows customers to access a pre-agreed proportion of the trust fund for their own future use. This decision does not have be set in stone however, and prior to each payment date a customer can choose to not take the entitlement.

If the customer decides to not take it, or postpones the entitlement, the money stays within the trust and will continue to be outside their estate for inheritance tax purposes, OMI said.

Another key aspect of the bond is that Old Mutual International Trust Company will be automatically appointed to run the trust.

“The Trust Company removes the administrative burden from the customer (settlor), and will give them advance warning of any entitlement, with enough time to decline the payment if it is not required,” OMI said.

Peter Kenny, OMI managing director, said the bond offers an innovative solution to UK customers: “Advisers and customers want simplicity, value, transparency and flexibility, and this new Select Lifestyle Bond combines the successful elements of the Lifestyle Trust with the Select Bond to form a truly compelling solution.”

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