CASE STUDY
Patricia
Patricia is 58 years old and has lived in Indonesia for the last 21 years with her husband and three children. Patricia owns several properties in Manchester, England and which are rented out primarily as student accommodation.
About Patricia
Patricia is 58 years old and has lived in Indonesia for the last 21 years with her husband and three children. Patricia owns several properties in Manchester, England and which are rented out primarily as student accommodation. The combined value of the 6 properties is £1,200,000.
She is a Swiss national and acquired the properties via an overseas company and using inherited funds. She worked in the real estate sector in Manchester in the early stages of her career and both Patricia and her husband have an ISA in the UK valued at £125,000 each. He also has a SIPP
Patricia contacted Andrew after reading that she may be liable to UK inheritance tax of up to 40% on almost the entire value of the properties and ISA. This might mean an HMRC tax bill of £400,000 even though she is not a UK national or resident.
Goals
- Calculate her total tax liability on death, whether that is due in the UK, Switzerland or elsewhere.
- Then, either mitigate what can be and ensure there is liquidity in her estate to cover the remaining liability or reduce the liability by selling some or all of the properties.
Development of a Wealth Mgmt. and Inheritance Plan, which…
- Documents her current assets and liabilities, this would include any existing life insurance policies.
- Reviews Patricia´s wishes for her assets after she dies. This will include reviewing any existing wills.
- Seeks UK tax advice on whether it is possible to move the properties or ISA out of the UK IHT tax net.
- Explore which is more cost-effective in reducing any remaining liability; by raising mortgages against some or all of the properties or to take out a life insurance policy that will payout £400,000 + inflation on her death or a combination of the two.