Expats and IHT- the pain might never go away!
Elsewhere in this newsletter we have referred to IHT which in our experience is the major destroyer of wealth for high net worth individuals trying to preserve assets for future generations. Moving abroad to a more benign tax jurisdiction does nothing to ease the potential risk to your capital base, in fact in many jurisdictions such as Spain, the risk increases because there is a potential liability to both local death taxes and UK IHT, a double whammy.
Yet there are some simple and cost effective strategies that can be used to protect wealth from a 40% tax hit on death.
Loan trusts and Discounted Gift Trusts set up within a life assurance bond can reduce the exposure to IHT and yet still provide access to capital – one of the major dilemma’s when planning an IHT strategy.
We have already mentioned QNUPS which in our opinion is a no brainer for non UK residents looking to mitigate this tax without giving up full access to capital.
Of course life assurance is a tried and tested method of protecting assets – this won’t reduce the liability but can provide a lump sum to pay the bill. It might seem an expensive option but ask us to do the maths and we will tell you what the cost is compared to the potential tax saving. You might be pleasantly surprised.
One interesting option to consider is the use of existing retirement planning vehicles. Pensions have gone from being decidedly IHT unfriendly to a possible way of passing assets to the next generation. Ask us to review your options to see if utilising your pensions is a viable alternative for you.
Which is the right IHT strategy for you? Find out by completing an IHT assessment factfind with one of our experienced financial planners. Call +350 200 50982 to start the ball rolling.