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International Wealth Planning
We provide comprehensive wealth structuring services for our clients. Broadly, we define wealth structuring to include estate planning, investment structuring and tax planning (although see our separate service description relating to U.S. and U.K. tax planning).
More specifically, our core competencies include estate and succession planning, U.S. estate and transfer tax planning, U.K. inheritance planning, advice concerning the structuring of international investments, planning involving charitable bequests and the use of specific planning vehicles (private trust companies, family partnerships and insurance solutions).
Estate & Succession Planning
Successful succession planning is achieved by fully understanding a family’s needs and dynamics. We listen carefully to our clients, integrating tax-planning and succession vehicles such as trusts, foundations, partnerships and companies, in order to match a solution to the objectives of the family. Too often we advise families who come to us with structures that were developed without proper understanding of the wealth owner’s family or goals. Frequently, these structures also were developed without full appreciation of the international legal aspects relevant to the family.
Families with interests (family members or investments) outside of their home country face complex issues. International planning requires an understanding of various systems and an appreciation for how solutions can be designed to work within—and sometimes arbitrage— various legal systems.
Our practice is focused primarily on families with connections or investments in more than one country. In some cases the family will be genuinely global, with long-term connections in a number of countries, which are likely to shift over time. We strive to offer and implement a flexible solution that accounts for present and future legal, financial and personal considerations for these families. We seek to develop a solid relationship of trust with these families in order to adapt solutions when the needs of the family change.
We also advise families whose interests outside of their home country are more limited, for example where all members of the family are resident in one country but investments are made abroad or where a family isplanning to move either temporarily or permanently to or from the U.S., the U.K. or Switzerland.
Planning for the succession of a family business requires special care. We help clients assess their objectives and implement solutions for family business holdings. These solutions encompass managing liquidity events, a sale or split-up of the business, management buy-outs, family advisory boards, charitable planning and succession holding vehicles.
Finally, we are versed in the matrimonial and property laws of various jurisdictions and work closely with other lawyers from those jurisdictions to integrate our planning solutions within the confines of forced heirship rules, community property rights and conflicts of law principles.
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U.S. Estate and Transfer Tax Planning
We provide a broad range of U.S. estate gift, and generation skipping transfer tax planning solutions to our clients. We have particular expertise in applying techniques to minimize these taxes in the context of non-U.S. resident clients, such as dual citizens living outside the U.S. We routinely advise U.S. resident clients on these issues as well. Another area of expertise is advising U.S. citizens married to non-citizens.
We advise upon and implement a variety of structures to minimize these taxes whilst achieving the succession planning objectives of the wealth owner. We frequently advise upon the creation of qualified domestic trusts (QDOTs), qualified personal residence trusts (QPRTs), grantor retained annuity trusts (GRATs), dynasty trusts, intentionally defective grantor trusts, charitable remainder trusts, family limited partnerships, private annuities, insurance trusts and other strategies.
We have particular experience dealing with the tax issues associated with foreign trusts settled both by U.S. and non-U.S. persons. The U.S. tax law can be particularly punitive in this area.
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U.K. Inheritance Tax Planning
Following a number of changes to the legislation governing the inheritance tax treatment of trusts in recent years, individuals who are U.K. domiciled are increasingly looking for alternatives for their succession planning. We assist clients in understanding the tax implications of existing trusts and on making settlements which allow families to pass on their wealth to future generations without suffering excessive punitive tax consequences.
We frequently use techniques involving business or agricultural property relief, bare trusts, nil-rate band trusts and will trusts. We also provide advice in respect of non-trust strategies for succession planning, such as making outright gifts which qualify as potentially exempt transfers (PETs), the inheritance tax exemption for spouses/civil partners, charitable donations and the use of offshore life bonds and annuities. For U.K. residents who are not domiciled in the U.K. for inheritance tax purposes, we advise on the setting up and administration of excluded property trusts.
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International Investments
We advise international clients making investments into the U.S. and U.K., including on the purchase of real estate in those jurisdictions. Proper structuring of inbound investments can minimize income and transfer taxes.
We also advise U.S. and U.K. clients on the purchase of international investments. Offshore investments, either in the form of deposits, investment vehicles such as offshore OEICs, private equity or hedge funds, property companies and life bonds or real estate have the advantage of providing diversification through access to wider investment choices than those available domestically.
We assist our clients to understand and assess the nature of these products as part of their wider planning strategy. In this context, structuring requires a proper understating of the rules of the relevant jurisdiction, the tax implications both at home and abroad and the integration of the investment into the overall estate plan of the client. We work with local advisors as required to provide turn-key solutions to our clients while ensuring maintenance of the client’s overall planning objectives.
Offshore investments may be particularly attractive to U.K. resident but non-domiciled individuals, and to U.K. expatriates living abroad and in receipt of a UK pension or rental income in the U.K. It is important that such individuals fully understand both the U.K. tax implications, and those of their host or home country.
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Charitable Planning
We advise clients on charitable giving strategies and the integration of those strategies within the client’s larger estate plan. For U.S. connected clients, we advise on the establishment of private foundations with particular experience in integrating offshore wealth with a tax-exempt family foundation. We also advise on the use of charitable remainder and lead trusts in connection with a client’s overall estate planning objectives. We believe that helping a client leverage his or her charitable bequests through the use of these techniques often is a more rewarding experience for the family than simply making cash gifts to charities, but there are trade-offs that also must be considered. Again, charitable planning must fit within a client’s larger objectives.
For U.K. connected clients, U.K. legislation provides tax relief for gifts made to a charity (or Community Amateur Sports Club) which fall within the relevant definition. This relief, known as Gift Aid, has been extended in its application by Finance Act 2010 to cover gifts to charities in the EU, Norway or Iceland (as long as such charities fall within the definition set down), thereby widening the appeal of such donations for global families. Tax relief is available against income tax, capital gains tax and inheritance tax amongst others.
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Private Trust Companies
We assist families in the establishment of private trust companies. For certain families, private trust companies provide an excellent tool to ensure continuity of family interests and security of the trustee. We expect the use of private trust companies to continue. Recent IRS guidance has provided greater assurance on the tax ramifications of U.S. settlor or U.S. beneficiary involvement in private trust companies. We advise clients on the advisability of establishing a private trust company. We also evaluate the proper jurisdiction and structure for a private trust company, and we will fully implement the solution. In particular, it can be worthwhile considering the use of a private trust company where an operating family business is to be put into trust.
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Family Partnerships
Family limited partnerships have been used for many years in the U.S. as a way to structure family holdings. We advise on the use of family partnerships with particular sensitivity to continued case law developments on the taxation of these vehicles in the context of U.S. estate and gift taxes. We believe family partnerships can provide an excellent tool for involving members of the family in business or investment ventures and for structuring holdings. We have brought these structures into the international context where appropriate to achieve similar aims.
For individuals who are domiciled in the U.K. for the purposes of inheritance tax, and since the introduction of provisions in Finance Act 2006 to extend the tax treatment of discretionary trusts to other trusts, family partnerships have become of greater interest. We expect this to be a continued trend. Family partnerships can provide many of the benefits of trusts, whilst avoiding the punitive IHT taxation. We advise our clients on all aspects of creating U.K. connected family partnerships, including sensitivities to Financial Services Authority regulation and running afoul of certain anti-avoidance provisions.
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Life Insurance Solutions
Life insurance continues to provide excellent estate planning and asset protection benefits. Most jurisdictions afford tax benefits to life insurance and we have particular expertise in evaluating the appropriateness of life insurance products within a global family’s portfolio. We advise our clients on the tax advantages, limitations and risk-mitigation issues associated with life insurance solutions. We find particular confusion in the international marketplace on the U.S. estate tax inclusion of life insurance policies without proper structuring. In addition, we advise on the use of life insurance and annuity products in connection with persons moving to the U.S. or U.K. for relatively short periods of time.
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