Trust planning to minimise tax and duties
If you want to pass your assets on to your loved ones while minimising your exposure to death duties and inheritance tax, you should consider setting up a trust.
This sets out how your money is to be managed and distributed among your beneficiaries, both during your lifetime and after you die.
There are many different types of trust; which one you choose will depend on the country where your assets are based.
First you need to decide your beneficiaries. Then you have to appoint your trustees, who will be responsible for managing and investing your money, or looking after property until it is passed on to your beneficiaries. It is a responsible role.
If the trust contains investments, you might also want to appoint a wealth manager. You spend years accumulating your personal wealth, so it is worth putting aside a few hours to set out how to pass it on to your family, says Christopher Palmer, head of wealth planning at the private bank Coutts.
Trusts are not just about sparing your loved ones a big tax bill when you die he adds: “They also give you the freedom to determine who will benefit from your assets, and when they will receive those benefits. Trusts can therefore be a useful tool protect young or vulnerable family members, and to provide long-term benefits to your loved ones.”
Careful use of trusts can also help you protect any assets you hold in the UAE, with the exception of property, Mr Palmer says. “You should consider transferring them into an offshore company. This way, the shares can then be passed by way of a will or in accordance with the laws of your home country.”
You can then transfer ownership of the offshore company into a trust or foundation. “This avoids the inheritance process entirely,” he adds.
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Published: May 23, 2014 04:00 AM