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I have spent a great deal of time and energy building a Investment business over the past 30 years
and its been a lot of fun and has given me a lot of wealth allowing me to have a super life
I am at an age late 50s when I have give a lot of thought about Wealth Succession to the next generation's and old age
I am healthy thank goodness
I have looked at all sorts of schemes to pass down the wealth Trusts ect and Company Formations and I have been trying to think out side the Box to avoid IHT
My conclusion is Trusts are expensive to run and you can tie yourself in knots trying to plan a way through this issue
I do have a little knowledge of IHT being a IFA a long time ago and after my search to solve this problem I came back to LIFE INSURANCE
I see very little information on PT Blogs on this subject and I don't understand why this is the case
I think Life Insurance should have its name changed to Death Insurance because that's what it is
A subject which is not nice to talk about but it comes to us all
My Bussiness is now split in two halfs I have personal BTL pre 2007 and post 2007 BTL which is in a company formation
My remedy to solve the problem is Life Insurance
All of my company mortages are on Capital and Repayment andI have written Life Cover in Trust to my successors who will be the Directors of the Company in future years with the Mortgages being Capaital and repayment the Insurance premiums are quite low and when I pass the Family will have the Life cover paid direct to the Tax Free and avoiding IHT and can then decide what they want to do with the cash ?Pay off the Company Mortgages or use the cash for other investments
I will pass over my and my wifes shares to my Children and Grandchildren using CGT rules and exemptions
My Personal BTL are in general interest only and I think I will keep them as they are but borrow no more money in my own name due to S24
The great thing of debt is its tax-deductible before IHT is payable so the amount of IHT is only levied on the value over and above the debt
So I have written a Life Insurance Policy whole of life intrust to my Son and His Children so they have the cash to pay my IHT Bill
when it comes
I think like most BTL Investors we are always trying to find a way to make more profit looking at fancy plans strategies ect
But I have come to the conclusion why not just pay an insurance premium to solve IHT issues and Succession Planning
Yes it will cost me money for the rest of my life but I can afford it
Its not Dead Money Its Life Money when I think about it and the Power from it all Tax free can not be under estimated
In a very strange way I thank George for S24 he has made me stop and think in a way I would have never done if he had not changed the tax rules
There is a silverlinning you just have to look for it
So my advice if IHT and succession planning and you have health is talk to a IFA and get advice
I can now rest in my bed at night knowing I have solved my IHT and Succession Problems
You don't need to re invent the wheel
Learn Change and Adapt ?????
I like the positive attitude DL!
I can't comment on the approach/structure you've used for your portfolio, as that's not my area of expertise, but as a solutionist, I always say there WILL be a way.
Yes i think this as well
After going round and round the houses on restructuring conundrums I have been thinking life insurance as well and made a few enquiries
Whilst fancy schemes can be good the rules may change again
Life insurance is fairly straightforward and robust and transparent
I already have quite a bit
So I have been thinking of significantly upgrading it as a very simple option will minimal paperwork.
Cash flow of £464 pcm on just one property may be diverted and buy me 1 mil of cover and peace of mind
I would be interested in views on this as to the pros and cons
Jonathan Clarke. http://www.buytoletmk.com
It is straight forward and cost effective just like building insurance
The only certain thing is there will be a claim unlike building insurance
Every life company can provide Trust Forms for free no solicitors needed and if things change you can alter the trust
If its not a road you have looked at I would recommend it If IHT and Succession planning is one of your goals
The great thing is its all Tax Free and avoids IHT Income Tax CGT ,VAT
Simple really I wish my father and mother had thought about it
I think most folk would do it but its the cost of the premiums they don't like
If it was free everyone would have buckets of it
What a great post DL, it'll give a lot of people some very useful food for thought. Can you get life insurance policies that fix the premiums on application (subject to the normal inflation/cpi increases), or do the premiums increase as you age?
For Mortgage protection the premium is fixed
some other policy's are reviewable so you would need to seek advice from an IFA which suits you best and the reason of the life cover
But as Landlords we all see an increase in building insurance every year so I can live with it
My building insurance has been coming down, but that is because I am in the process of switching from individual to portfolio insurance
well your lucky lol I also fly its my Hobby so I was rated higher for Life cover lol
Is CGT due on the sale of UK Ltd Co shares to my children, when both me and my children are non UK tax resident ?
I was planning to try and transfer the shares at least more than 7 years before my death.
I am not sure where you stand living over seas
I know my wife and I are going to transfer shares over the next 20 years which takes me up to age 79 so its a long term job own
My own goal is to off load the Company so I own nothing in old age
The rest of my estate will stay with me and then given to my son and Grandchildren after we are gone this part will be liable for IHT and that's where the whole of life insurance comes into play
Just a note on premiums don't use the Life Insurance as an expense against the Business other wise other rules come into play
You must pay the premium's out of your personal account
I have glimpsed that debt is useful to reduce IHT / CGT but have not yet given it sufficient thought.