Succession planning in a globalised world

Published on: 04/16/18 11:35:am

Trust planning internationally is often underused, and the benefits of succession planning, asset protection and the use of loans from trusts to create additional debt are being missed by many.

In this case study, we look at why it is important to consider in whose name assets should be owned, both now and in the future.

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The couple lives in Dubai but their daughters, both of whom were born, educated and live in the UK, are married to men of British origin and domicile. Neither of them have children but they both eventually hope to start a family.

The immediate family relationships are stable and none of them have any intention of ever living in India. However, the husband has three brothers still resident in India, with whom he has a strained relationship and he desires that no wealth should pass to them or their families on his death.

The couple has £5m in liquid assets held in cash and investments, almost entirely in the husband’s name. They have four UK properties, all mortgage-free and let, worth £1.4m. All four are owned in the husband’s name and show only a small capital gain. Their main home in Dubai is valued at AED6.5m (£1.3m) with a mortgage of AED3m and is their only major jointly-owned asset.

The husband is semi-retired with UAE business interests, but plans to fully retire within two years. They have no immediate intention to return to the UK but are likely to do so for part of the year if they have grandchildren. They will keep a property in Dubai but hope to downsize with no mortgage.

Once fully retired, they expect to require £100-£120k per annum of additional income, net of tax, from investments.

Both man and wife were particularly concerned about forced heir-ship and required a structure to be put in place that would ensure assets pass appropriately down their bloodline. Additionally, given substantial, multi-jurisdictional assets, a mixed UK domiciled/non-domiciled marriage and UK inheritance tax (IHT), they required planning advice.

They also needed advice regarding the double taxation agreement for IHT between India and the UK, and it is important to consider in whose name assets should be owned, now and in the future.

The desire to clear their mortgage on the UAE property had to be discussed, as did how best to produce the additional income in retirement, and whether the possibility of future UK residency will affect that planning.

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