SMOOTH TRANSITIONS MAKING SURE YOUR ASSETS REACH YOUR LOVED ONES INTACT
Misers aren’t fun to live with, but they make wonderful ancestors David Brenner
Introduction An increasing number of professionals of all nationalities have been moving and working abroad in the last decade. Whether you are a young executive or a high net worth individual with a diversified portfolio of global assets, you will have specific financial requirements and objectives. Offshore financial products and services can help you achieve financial security and provide you with the quality of life you require as an expatriate or international investor. Investing in international accounts is no longer the premise of the rich and famous; all expatriates living abroad may now enjoy flexibility, among other benefits, by investing their money overseas. The offshore financial industry has become more popular as financial institutions from around the world have entered the offshore market as a result of the high demand. There are now many providers that offer a broad range of services ranging from saving schemes to pension and retirement plans and wealth management accounts to lump sum investment products. Over the years, deVere has developed strong partnerships with some of the world’s leading investment houses and insurance companies, all of which offer some of the most competitive products in the marketplace and a high level of protection for the investor. In this guide, we aim to provide you with essential information on Inheritance Tax. You may think that as an expatriate, your estate may now be free of inheritance taxation liabilities. However, unless you have taken certain steps already, this may not be the case.
Planning For The future For many of us, planning for education, retirement and illness is a matter of course. Yet considering our own mortality is not something we like to think about even though it is an unavoidable fact. “Death duty” is just as inevitable. However, there are specific actions you can take to protect your assets from the tax collector. The information hereunder aims to help you understand your estate tax liabilities and how best to take action to avoid your family losing out on such liabilities.
What is IHT? IHT – or Inheritance Tax, is what the UK Government calls Death Duties. The US Government refers to this tax as the Estate Tax, while in France they call it the Estate and Gift Tax. Whatever the name for this form of taxation, one thing is universally true: further taxation at death on assets which you have already paid tax on throughout your life is unfair.
SMOOTH TR ANSITION S : M A K I NG S U R E YO U R A S S E TS REACH YOU R LOV E D ON E S I N TA CT
Truth on automatic expatriate avoidance It is wrong to believe that you can avoid inheritance tax simply by moving from your country of birth. Depending on your current circumstances, it may be possible to reduce your income and capital gain taxes, however it is more complicated to escape taxation of your estate at death.
Determining domicile and changing domicile If you leave your country of birth for long enough, you can lose residency in that country. However losing or changing your domicile is quite a different matter. Your domicile will always revert to your country of birth, unless you take specific action to change it. Therefore as an example, if you are a UK expatriate, you may be liable for inheritance tax on your entire worldwide assets at the time of death if you give up your UK residency but not your domicile. In order to avoid such scenario, you could change your domicile though this is not easy to do and is generally discouraged. As an example, the following criteria need to be fulfilled for a British national to change his domicile:
• One must leave the UK with the “intention never to return”
• One must acquire a new domicile – a “domicile of choice”
• One must live in the new domicile and show that it is ones intention to live there forever
Even then, an ex-British national can still be deemed to be UK domiciled for IHT purposes. For example, you continue to be deemed domiciled in the UK for the three years after you cease to be officially UK domiciled.
What Can You Do To Reduce your liability? To determine the potential death duty liability on your estate, a full and comprehensive financial review must be carried out. There are many areas that need to be considered and professional advice is essential to make sure that you cover every potential aspect of the situation. There are a number of options open to you in life that may enable you to reduce the death tax burden due on your estate, including:
• Gifts – The giving of assets as “gifts” during your lifetime can reduce liability at death. The gift must be made a number of years before your death for it not to be counted as part of your estate. • Trusts – A trust is a legal entity that can be used effectively for financial and estate
planning purposes, especially if it is established offshore. A trust can enable you to make
long term plans for the preservation and distribution of your wealth during or after your
lifetime. Depending on the type of trust you choose, you can be certain that the
management of your assets will continue in accordance to your wishes.
• Wills – Do not die intestate (without a will). If you don’t make a will and keep it valid,
your estate may not be handled according to your wishes. As an expatriate, you need to
ensure that you have a will in the country in which you reside and it is governed by the
laws of that country, as well as a will covering any assets you may have back home. Also
remember that divorce or marriage can invalidate a will.
SMOOTH TR ANSITION S : M A K I NG S U R E YO U R A S S E TS REACH YOU R LOV E D ON E S I N TA CT
Receive financial advice Getting to grips with the complexities of estate planning and how to protect your loved ones and your own wishes requires professional advice. You need to establish your liability and find the solutions that can help reduce and negate any such liability. If you haven’t started planning yet, now is the time to start. At the deVere Group, our consultants work with some of the leading investment houses and insurance providers. All our employees have been trained to provide the best advice and are familiar with the local knowledge/requirements of the region you live in/may relocate to. We can help you look into the different options that will ensure that your assets are protected according to your wishes.
About the deVere Group The deVere Group is the world’s largest independent financial consultancy group. We work with international investors and expatriates to find financial services products that suit their medium to long term requirements for investments, savings and pensions. With in excess of US$7 billion of funds under administration and management, deVere has more than fifty thousand clients in over a hundred countries. Our independence and ability to offer financial products that are tailor-made to fit an individual’s needs are behind our success. As a result we now have offices in over forty countries. You can find us in Abu Dhabi, Brussels, Dubai, Geneva, Hong Kong, Johannesburg, London, Mexico, Moscow, Shanghai, Tokyo and Zurich, amongst others. The advice we provide is free and without obligation.
SMOOTH TR ANSITION S : M A K I NG S U R E YO U R A S S E TS REACH YOU R LOV E D ON E S I N TA CT
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The companies below are part of the deVere Group: deVere and Partners (UK) Ltd is authorised and regulated by the Financial Services Authority (469151). deVere Recruitment Ltd (503055) are an appointed representative of deVere and Partners (UK) Ltd. deVere and Partners Investment Services (Pty) Ltd is an Authorised Financial Services Provider in South Africa. deVere and Partners (Belgium) BVBA is authorised by the Banking Finance and Insurance Commission (CBFA) in Belgium and registered on the intermediaries register under number 61476, category insurance brokers. The following group of companies operates under the same license in Belgium: - deVere and Partners (Cyprus) - deVere and Partners (Belgium) Limited BVBA, succursale Luxembourg S.a.r.l. - deVere Germany GmbH
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