IHT - Inheritance Tax v life assurance policy?

[Julian927]

It has been suggested to us that we should "establish a joint life second death term assurance policy" for the amount that we might be liable for IHT should one of us die before we could be considered to have broken domicile with UK.

Does anyone know where we could get one of these from? Does anyone have any experience?

All advice gratefully accepted.

Julie

[lyndalelodge]

If you're married and your will states that everything goes to the spouse, then IHT won't kick in until the second death. Therefore a second death policy is probably the way to go, if this is the case.

 

Also, you should get the policy written in trust for the proposed beneficiaries (children?), so that it doesn't get added to you estate and IHT levied on the life policy.

 

In general terms, IHT is very specialist area and you should normally see an accountant for appropriate advice; but if you are happy to take a flyer and cover your own best estimate of IHT with a life policy, then best to see an IFA to get this put in place.

 

Please note that domicile is not normally something that can be easily or quickly 'broken' and again is a highly specialist area, but with specialist comes expense. Therefore, if you wanted to give yourself lifetime cover rather than a specied period (term assurance) of 5 or 10 or 20 years, then you need a "whole of life" policy.

 

I'm not entirely sure what the situation is in Oz re life policies in general, but certainly in the UK, it would be worth weighing up the pros & cons of the diufferent types of policy. I asume you get all the same types of policy in OZ, but I don't know.

 

The general jist is that if you are loaded and the tax problem could be significant, then best to get professional advice. If it's marginal with a small potential liability, then perhaps take a flyer and just sort a life policy (in trust!). (By loaded, I would say a combined worth of over £800k. The IHT on £800k on a second death would be approx £60k, so it's worth spending a few thousand to save that in the most sensible way. If you're worth more than that, the IHT goes up by 40p in the pound).

 

Hope this helps.