I have recently come across a Flexible Life Interest Trust (FLIT) where the Trustees are planning to invest in an Investment Bond and make capital withdrawals of up to 5% per annum to the “life tenant”. The trust instrument contains powers to do this.
But what about tax? On the basis that on death, the Life Tenant is treated as the owner of the FLIT, is the Life Tenant then treated as having made PET’s of the capital withdrawals made during the lifetime of the Trust?
Any thoughts please.
Brewer Harding & Rowe