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We all want to protect what we leave behind—but without planning, inheritance tax can take more than you expect.

In the UK, only the first £325,000 of your estate is inheritance tax-free. Anything above that, could be taxed at 40%, leaving your family with a significant bill.

So, what can be done to make sure your family receives what you intended?

That’s where the Aviva Flexible Reversionary Trust comes in.

Designed to be used with the Aviva Onshore Bond, the trust helps you manage potential inheritance tax liabilities - while keeping flexible access to your money.

When you set up the trust, you outline a flexible schedule of payments to support your future. Because these payments are flexible, Trustees (the people you select to manage the trust), can delay or skip them based on your needs.

Placing an Onshore Bond into a Flexible Reversionary Trust is considered a gift, which starts a seven-year clock. After that, the bond sits outside your estate for inheritance tax purposes. Any growth is excluded from day one.

Here’s an example:

Meet Helen. She invests £150,000 into an Aviva Onshore Bond and places it into the Flexible Reversionary Trust, via her financial adviser.

Helen appoints independent trustees to manage the trust and selects her children to benefit from it.

The bond is split into 1,000 identical parts known as segments, which her adviser groups into blocks called policy funds.

Helen’s investment is split into 50 policy funds of £3,000 each. She wants the option to access five funds each year for ten years—giving her £15,000 annually. The value she receives may be higher or lower depending on how the investments perform, as their value can go up or down. This schedule is set at the outset of the trust.

In year one, Helen’s trustees decide to defer her entitlement to year 11 - she doesn’t need the money yet.

In year two, Helen’s trustees grant her the five policy funds she is entitled to and she uses these to pay for a dream Caribbean holiday.

In year three, Helen wants to use three funds to help her daughter, Lily, with university costs. Helen’s trustees give up three out of the five planned funds. As Helen’s policy funds have grown in value this provides £10,100 for her tuition and travel.

The trustees can either cash in the three funds—taxable to Helen—or assign them to Lily.

If assigned to Lily, who has no other income, there’s no further tax to pay. The other two funds are deferred until year 12.

In year four, Helen doesn’t need the money, but her son Nick plans to move his family closer to home in a couple of years’ time. Helen’s trustees move three funds to year six and give up the other two. Helen also gives up her entitlement in year 5.

By year six, Nick’s family is ready to move. Helen’s trustees use the five funds available, plus the three they moved forward, to help support Nick’s family move.

By year seven, Helen’s original gift is outside her estate for inheritance tax purposes. She’s supported her family and protected her legacy — all while having flexibility.

So, let’s recap the benefits of the Aviva Flexible Reversionary Trust:

·       It helps reduce inheritance tax – After seven years, your gift falls outside your estate.

·       Access your money when it suits you – take policy funds or defer them based on your needs.

·       Choose who benefits – Together with your trustees you choose who benefits and when.

·       Make tax-smart decisions – Assign funds to loved ones in a way that suits their tax situation.

·       Avoid delays – Trustees can act quickly after your death, without waiting for probate.

·       Trustees retain control until payments are due.

Speak to your financial adviser today to see if the Aviva Flexible Reversionary Trust could be right for you.

This product is designed for trusts established by a single individual. Potential tax benefits depend on current legislation and your individual circumstances, and may change in the future.

LF50611 12/2025