The spousal bypass trust

Sam Newton considers the tax benefits of the use of discretionary trusts for spouses

The introduction of Pension Freedoms brought about the widening of the range of potential beneficiaries on death in the form of the beneficiaries’ drawdown, and the removal of any cap on income withdrawals and beneficial tax status. These benefits apply to defined contribution pension schemes; this article does not cover defined benefit schemes.

Using a discretionary trust for the death benefit (sometimes called a bypass trust) has some valuable characteristics, such as: