The Family Gift Trust is a type of trust that is established outside of a will and is primarily used for lifetime planning. It allows clients to transfer assets into the trust while they are still alive. The key feature of the Family Gift Trust is that the Settlor of the trust is not a potential beneficiary of the trust. This means that they legally cannot benefit from the assets in the trust.

By transferring assets into the Family Gift Trust, the Settlor can potentially reduce their Inheritance Tax (IHT) liability, assuming they survive for 7 years from the date of making the gift. This is because the value of the assets in the trust would be excluded from the Settlor's estate for IHT purposes. However, if the Settlor were to die within 7 years of making the gift, the assets may still be subject to IHT.

The Family Gift Trust is a useful tool for clients who want to make gifts to their family members or loved ones, but also want to retain some control over the assets. The trust allows the Settlor to choose the beneficiaries and the terms of the trust, and can include conditions that must be met before the beneficiaries can receive the assets.