This is a complex situation and more info would be needed to provide advice.
However, there are a few general points that might be useful in relation to your questions, and may clear up some of the confusion.
When a Gift&Loan Trust is set up, it takes 2 parts - the gift, which falls outside the estate after 7 years, because the settlor (your mother) retains no rights to it, and the loan, which remains in the settlor's estate, with full access to the capital; if there is any growth in the capital which has been loaned to the trust, then this growth is normally outside the estate too. The trustees can pay the settlor a regular 'income' from the trust, which is in effect a repayment of the loan. With an insurance bond, the loan is normally paid back at 5% a year to the settlor because this does not incur a tax liability on the settlor for the first 20 years; this is because 20 years at 5% represents repayment of the original loan (ie 20 x 5% = 100%)
The 20 year period relates only to the tax status of your mother, with regard to those withdrawals, and not to the inheritance tax due on you or your sister. The original Â£3,000 gift would have been outside your mother's estate because she had survived for more than 7 years after making it. The growth (on the 97k and the 3k) would probably have been outside the estate too, depending on the trust wording.
If your mother changed the trust before she died, in order to gift the remaining loan to you, then that gift would become subject to IHT. However, it might be taxed at 0% or 40%. Whether there was any IHT due on the gift to you and your sister would depend on your mother's total estate, and how much of this has passed to your father, and how much to you.
In terms of the insurance bond which is now in the trust, the amount of tax due on encashment will depend on choosing the right manner of encashing it or assigning it to you/your sister. The right choice will be determined by your tax status. However, you do not have to wait until the 20 year point to do this - you could do it now if you need the money - and waiting will not alter the fact that there may be a tax liability. The important thing is to take advice in minimising the tax due.
Please contact me if you would like advice based on your personal situation, as there is more information that would need to be established first.
Advice on these matters is often best paid for by fee, although a good IFA will advise you on the most cost effective route for you, be that fee or commission, as appropriate.
I hope the above info helps
Ian Martin APFS
Independent Financial Advisers providing professional, plain-English advice