Inheritance Tax Planning

Michael and Mary are US citizens, resident in the UK, both aged 60 with 3 adult children. They have just become deemed domiciled and so are subject to UK inheritance tax [IHT] on their worldwide assets. The nil-rate band is £650k per couple and inheritance tax is 40% for chargeable assets [2019].


The couple jointly owns a £4m home in London, a USD2m investment portfolio and they have a joint bank account with USD5m in Jersey. Michael has a £1m UK pension, a USD1m 401K and USD5m company shares in a large international company listed on the NYSE.


Vie International can arrange a USD10m US life insurance policy that is based on Joint Life Second Death with a highly rated US life insurance company. The policy would be a no lapse Guaranteed Universal Life and would be owned by a US Irrevocable Life Insurance Trust.


The cost-effective USD premiums are made to a trust and are treated as a gift of normal expenditure from income.

The policy produces an attractive Internal Rate of Return [IRR] on the death benefit.

The death benefit, paid tax free for both UK and US purposes, can be used to settle the IHT obligation on the death of the second spouse so assets may be passed on in full to future generations. For US citizens, a US policy is required in order to be considered life insurance for US tax purposes.

Case study results are for illustrative/informational purposes only and may not reflect the typical purchaser's (client’s) experience and are not intended to represent or guarantee that anyone will achieve the same or similar results.