The discounted gift trust 10 Establishing your discount In order to satisfy HM Revenue & Customs (HMRC) requirements and provide you with an estimate of your discount (immediate reduction in your IHT liability), we need to be able to calculate the part of your investment which is likely to be required to provide you with the regular withdrawals. So that we can do this as precisely as possible, we need to establish how long your withdrawals are likely to last. Basically, this involves estimating your life expectancy and that of any other settlor entitled to the withdrawals. This is why we ask you to complete some health questions in the application form. We will also request a General Practitioner’s (GP) report, as this can then be used to confirm your (and any other settlor’s) state of health at the time you placed the bond into trust. This is known as underwriting. The estimated discounts initially quoted by us may then be amended to reflect your actual state of health once the GP’s report has been received and reviewed. The trust will not come into effect until the medical evidence has been assessed by us. However, the bond can start before we receive the medical evidence, unless you instruct us otherwise, and when we have completed the health assessment we will start the trust by dating it. This is called the ‘declaration date’. Alternatively, if you do not want us to start the trust automatically, you can ask us to inform you of the calculated discount before the bond is placed in trust, but you must tell us this when you apply. Can we guarantee the discount? No, whilst we use our experience and understanding of current legislation to assess the discount, the actual discount that you receive will only be determined by HMRC following your death. We cannot therefore guarantee that HMRC will agree with our calculations. It will be for your executors to negotiate with HMRC and agree the amount of any discount, if necessary. What if I’m not in good health for my age? If your life expectancy is less than average, the amount of discount we calculate will be lower than the example discounts we produce as these are based upon someone in good health. This means that although you will still be able to take withdrawals from the bond and there may be an IHT saving, the saving will be less than if you were in good health for your age. In some circumstances, where your life expectancy is very low, you may only receive a nominal discount. Executors The persons appointed in the deceased’s will to supervise the administration and distribution of the deceased’s estate in accordance with their last will and testament.