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Estate planning - Samantha Tanner, Wealth & Living

Getting to grips with estate planning and inheritance tax

For many of us, planning for retirement is a matter of due course. However, considering our own mortality is not something that is given much thought, let alone talked about. However, it is still a mandatory process especially as death duties on your loved ones can be expected.

There are specific actions you can undertake to ensure that your estate and assets fall into the hands of your loved ones. 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 remains the same - further taxation at death on assets which you have already paid tax on throughout your life is unfair. If you are an expat living overseas, 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.

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, 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.

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.

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.

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.

Samantha Tanner

Samantha Tanner is the editor of Wealth & Living Magazine which provides wealthy individuals and expats advice on relocation and the latest luxury must-haves.

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