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Providing Protection Against Inheritance Tax Liabilities For A Trustee

Providing Protection Against Inheritance Tax Liabilities For A Trustee | John Lamb
  • Life tenant in his 50s
  • UK trustees with remaining inheritance tax liability of £60 million
  • Unable to obtain further cover in the UK due to the levels of life insurance already in place
  • Referral made to a US broker who arranged term assurance policies in the US market

Client’s circumstances

The clients are UK trustees of a UK resident trust.

The life assured is a UK resident and domicile in his 50s who is the life tenant of a trust.

After John Lamb Hill Oldridge placed £90 million of cover in the UK market, the trustees still had another £60 million of potential IHT liability to cover.

Issues to be addressed

We had maxed out the global re-insurance market for term insurance cover. Although additional capacity for whole-of-life insurance was available, it was very expensive and outside the trustees’ budget for insurance premium spending.

Tailored solution provided by John Lamb Hill Oldridge

This case illustrates the broad range of solutions available to us. Although the life assured was UK resident and domiciled, he and the trustees had a nexus to the US so we were able to refer them to a trusted broker based there.

Given the cross-border planning issues, John Lamb and the US broker worked closely with the trustees’ lawyers and tax adviser to identify the best way to structure the ownership of the US policies.

The solution provided to the client involved a syndicated placement of 15-year term assurance policies. The total sum assured was just over US$78 million which, at the time, was equivalent to the trustees’ inheritance tax liability of £60 million.

This case demonstrates how John Lamb Hill Oldridge is able to assist clients who might have a variety of complex needs and circumstances.