Paul and his wife, Margaret, live in South Africa, where they are resident and domiciled individuals. They owned a portfolio of investments and wanted to invest in a modest property in the UK. They came to the team at Nedgroup Trust to maximise the income from their holdings, as well as ensure their children benefitted from their wealth. Paul also wanted a means to remit his annual foreign investment allowance from South Africa and was interested in learning more about an interest bearing loan account.
They were particularly interested in an offshore Jersey trust. This is a flexible vehicle for individuals and families, whereby the discretionary trust gives the trustees full license to manage the assets of the trust as they see fit, and allow for the ability to change the structure and strategy of those assets as needed. This is particularly useful as and when circumstances change, such as an amendment in tax laws and/or if the trust’s beneficiaries choose to emigrate to a new country.
The wealth structuring process
We sat down with the couple to establish their main financial goals and objectives, which included:
Following the establishment of the trust, the trustees purchased a property to be owned by the trust and which was under the inheritance tax threshold of £325,000.
The property is now let out on a commercial basis and receives income, which is invested. In this case, the client did not wish to borrow against the property.
As an offshore trust is classified as a non-resident landlord in the UK, Paul is able to defer their taxable income to be paid the following tax year. This allowed for the property-related expenses to be matched off against the taxable income, resulting in a lower tax to be paid, if any.
Further to this, given the assets are held within the trust and do not form part of the clients’ estate, it would not be subject to probate, although this is limited to value of assets that the client has loaned to the trust.
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