Gift trusts are designed for people who do not need access to their capital, and want to pass it to their heirs free from IHT, but also want to draw a regular income.

You make a gift into a single-premium insurance bond for your children (say), fixing how much income you draw until your death. If you survive for seven years, the bond does not count as part of your estate. Your heirs keep any growth in the bond as well as what remains of your investment.

These are not affected by the changes to the Budget in 2006