A Discounted Gift Trust has two parts; the first is the same as a Gift Trust in that once monies are gifted into the trust the seven year period that the donor needs to survive starts. The difference is that the donor sets a level of income that they wish to receive from the capital for the rest of their life at the outset of the trust. Depending on various factors such as the level of income, age, health etc. this gives the donor an immediate ‘discount’ on the original gift that is potentially liable to IHT for the seven year period. The donor has no access to the original capital but will receive an income for the rest of their life. This income cannot be varied or stopped in any way. It is also not possible to pass on any monies from the trust to the beneficiaries until after the donor has died, this is far less flexible than other trust options.