Life insurance can offer an elegant solution to what will be steep IHT bills, says partner Simon Malkiel, head of trusts, tax and estate planning.
Assets may be left to a surviving spouse or civil partner tax free, but a tax of 40% is payable on the death of the second partner.
“It is a new tax for international clients who have never had an IHT exposure until recently,” Malkiel told International Adviser. “It is something they are grappling with.”
Life insurance products can be tailor-made to pay out when the tax liability crystallises. It can be a relatively simple and cost-effective option for those who are 40 to 50-years-old and hold high-value UK property.
Malkiel also warned that UK property owned by globally mobile clients is likely still being held in out-of-date offshore structures, which protected them from IHT until the law changed in 2017.
“IHT is a deeply unpopular tax and it will become a deeply unpopular tax with an international audience as well,” said Malkiel.
