Why use a trust in conjunction with an offshore plan?
There are various reasons why you might wish to place your offshore plan into a trust. The most common reasons are explained below.
To avoid Isle of Man Probate
Plans issued by RL360 are classed as Isle of Man assets and Isle of Man Probate will therefore be required on the death of the plan owner(s) before either proceeds can be paid out, or the plan is re-registered into the name of the new owner. By placing a RL360 offshore plan in trust, you avoid the need to obtain Isle of Man Probate upon death of the plan owner(s) as the plan is owned by the trustees.
To control family assets (Succession Planning)
Trusts can offer advantages over outright gifts since the donor can exercise a degree of control over their assets once they have been given away. If the plan is written in a flexible trust, the trustees can be instructed to hold the plan until the beneficiaries reach a certain age or for future children or grandchildren.
UK Inheritance Tax (IHT) planning for UK domiciled individuals
For individuals who are domiciled or deemed domiciled in the UK, UK IHT applies to their worldwide assets and therefore includes offshore investments. Placing an offshore plan under certain trusts can enable some or all of the proceeds from the plan to fall outside of the settlor's estate for UK IHT purposes.
UK IHT planning for non-UK domiciled individuals
An individual who has been a long term resident of the UK for Income Tax purposes but is not UK domiciled or deemed UK domiciled could consider placing their offshore plan in an Excluded Property Trust. This can avoid the value of the plan being taken into account for UK IHT valuation purposes even if the individual does eventually become UK domiciled.
Important Notes
The UK tax information set out in this section is based on RL360’s understanding of the general and current application of HM Revenue and Customs (HMRC) practice as at June 2019. The contents of these web pages and any trust wording provided by us should not be used as the basis of advice given to individual clients without independent legal advice being sought. RL360 cannot be held responsible for any actions taken or refrained from being taken by individuals as a result of the information provided in this guide.