Insurance arrangements

Published: 29 Aug 2013

Updated: 29 Aug 2013


Written by Ray Coman


Financial instruments such as bonds, both onshore and offshore, trusts and life assurance policies can be used to help mitigate inheritance tax.


Discounted Gift Trust


As a retirement arrangement insurance providers offer discounted gift trusts, which provide an annual income, and in which any capital can be transferred to beneficiaries, without incurring inheritance tax. The capital is held in a trust which is transferred to the beneficiaries, and does not form part of the taxable estate. In many cases, there may be a requirement to survive seven years in order for the trust capital to be outside of the estate.


Insurance cover for taxation


Insurance can be obtained to cover inheritance tax that may be payable on lifetime transfer, or on all or part of the estate.


Life insurance for beneficiaries


Life insurance proceeds can be directed into a trust which is set up on death. Alternatively, life insurance could pay out to beneficiaries on death. As the insurance was not transferred by the deceased it is not considered to be part of the estate for inheritance tax purposes. As with all types of insurance there is the risk that the cost of premiums will outweigh any benefits and tax savings.


Coman & Co. are not regulated by the FSA and therefore not able to provide any detailed advice on insurance arrangements. However, we would be pleased to review arrangements to assess whether the tax implications

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