WEALTH MANAGEMENT the US and the UK inheritance tax bands. A simplified example is probably the easiest way to illustrate potential savings: Let us assume an individual with a total estate worth $6 million held in the US. To keep round numbers, let us also assume the UK threshold of ÂŁ325,000 equates to $500,000. Therefore $5.5 million of assets would potentially be subject to a 40% inheritance tax once the individual becomes deemed domicile in the UK. Under UK rules, the $6 million estate will pay inheritance tax of $2.2 million. Under US rules, the $6 million estate will pay $228,000 in inheritance tax. If this individual funds an excluded property trust with $4.93 million ($5.43 million US lifetime allowance less the $500,000 UK nil rate band), then the estate tax bill as a UK domicile individual will now be equal to what the US estate tax bill would have otherwise been ($228,000). That results in a potential inheritance tax savings of nearly $2 million! The opportunity to fund an excluded property trust ceases when the deemed domicile threshold has been crossed. So, what else can be done? Developing a lifetime gifting strategy remains a viable option provided the requisite seven years has been outlived, to be considered an exempt transfer. For some people a strategy of passing on wealth during their lifetime may be a very effective way to meet long-term priorities and objectives. It is essential to work with an adviser to put together an appropriate and individual strategy as everyone has differing needs and requirements. Additionally, an adviser can help
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determine the best way to go about implementing the lifetime transfer of wealth. What will remain of utmost importance, is understanding precisely when the rules will begin to apply and take any relevant action appropriately.
Risk Warnings And Important Information The above article does not take into account the specific goals or requirements of individuals and is not to be construed as advice. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy. MASECO LLP trading as MASECO Private Wealth is authorised and regulated by the Financial Conduct Authority, the Financial Conduct Authority does not regulate tax advice. MASECO Private Wealth is not a tax specialist. Andrea Solana is Head of Advanced Planning at MASECO Private Wealth where she helps to provide financial planning and wealth structuring advisory services to US expatriates in the UK and British nationals in the US. Andrea spent the first 9 years of her career with a well-known Washington DC based international tax and global wealth management firm where she gained considerable experience advising high net worth individuals with multi-jurisdictional
financial interests to design and implement strategies for tax-efficient and risk-managed asset growth. She has written numerous white papers regarding fundamental financial planning and investment strategies for US connected individuals, and has previously been a speaker on financial planning topics at numerous places including both The World Bank and International Monetary Fund (IMF). Andrea graduated from University of Virginia’s McIntire School of Commerce with a degree in Finance and Management and completed her MBA at Imperial College, London. Andrea holds her UK Investment Advice Diploma and US Series 65 license.
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