PROVIDING OFFSHORE SOLUTIONS For Financial Advisers Only Paul Schrijver International Specialist BSc FPFS Chartered Financial Planner OFFSHORE BONDS WHAT HAVE THEY DONE FOR YOUR CLIENTS ID: 1030067
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1. OLD MUTUAL INTERNATIONAL – PROVIDING OFFSHORE SOLUTIONS For Financial Advisers Only.Paul Schrijver – International SpecialistBSc, FPFS, Chartered Financial Planner
2. OFFSHORE BONDS – WHAT HAVE THEY DONE FOR YOUR CLIENTS?HELP YOUR CLIENT TO MANAGE WHAT LEVEL OF TAX IS PAID AND WHENSELF DETERMINATIONSAVING BANDDIVIDEND TAXATIONRETURNS - GROSS ROLL-UPSAVING BEYOND PENSIONSASSIGNMENTS
3. APRIL 2015 CHANGES More room for tax planning: £10,000£10,600£2,880 @ 10%£5,000 @ 0%Source: HMRC Autumn Statement December 2014
4. OFFSHORE BONDS – WHAT HAVE THEY DONE FOR YOUR CLIENTS?SELF DETERMINATIONNO CGT ON SWITCHINGRELIEF FOR NON RESIDENCE TOP SLICING NON INCOME PRODUCING 5% ALLOWANCE HELP YOUR CLIENT TO MANAGE WHAT LEVEL OF TAX IS PAID AND WHEN
5. OLD MUTUALINTERNATIONAL -TRUST PLANNING SOLUTIONSFor Financial Adviser use only.
6. TRUSTS ARE USEFUL FOR…Making arrangements for your family, and future additions, because you never know what’s around the cornerHelping with tax planning to reduce your liability, especially for inheritance tax (IHT)Making gifts – you can specify at what age and in what circumstances your intended beneficiaries can have themProtecting assets if you don’t want the beneficiary to have full control of them
7. CLIENTS WILL THANK YOU FOR HELPING THEM…Retain the required control of their assets during their lifetimeProtect assets for their bloodlineProtect assets from creditorsSave on tax liabilityBIG PICTURE SOLUTIONS FROM OLD MUTUAL INTERNATIONAL
8. TRUST SOLUTIONS FROM OLD MUTUAL INTERNATIONALALL WITH THE OPTIONAL ADVANTAGE OF A CORPORATE TRUSTEE…Enhanced Loan TrustDiscounted Gift TrustLifestyle Trust
9. 9LOAN TRUST IN ACTIONTrustees invest into bond£300,000Estate(cash)£300,000TrustLoanRepayable on demandor on deathGrowthOutside estate as generatedStill inside the estateuntil repaidand spentHeld on trust for potential beneficiariesTrustees invest into bond
10. LOAN TRUST – THE FIRST STEP ON THE TRUST-PLANNING LADDERMaybe just inherited moneyMaybe just experienced IHT for the first timeWant to do some IHT planning…BUT NOT GIVE UP ACCESS!
11. ENHANCED LOAN TRUSTLimited liabilityANDTo speed up the IHT benefitsNo need to take it out of the trust (and lose control)No need to disinvest
12. 12ENHANCED LOAN TRUSTTrustees invest into bondGrowthImmediately outside the estateUp to NRBAllowanceUp to NRBAllowance714 TimeValue7 years7 years
13. DISCOUNTED GIFT TRUST (DGT)Income requiredWant to reduce IHT liabilityCan afford to give up some access to capitalPotential for instant reduction in value of investment for IHT purposesRemainder of investment is a CLT/PETGrowth outside the estate‘Income’ payable
14. DISCOUNTED GIFT TRUST – ‘CARVE OUT’Residual fundcontribution less value of Settlor’s fundSettlor’s fundbased upon mortality & level of withdrawalsImmediate discountCLT/PETSettlorTrustees
15. OLD MUTUAL INTERNATIONAL DGTAllows trustees to use underlying bond to pay on-going adviser fees and any IHT chargesSettlor cannot pay on-going fees after settlement into trustExisting bond may be settled into DGT at any time Providing lives assured not settlor or spouseSettlor can waive withdrawalsFurther gift for IHT purposesOption at outset to defer withdrawals for up to 5 years
16. Lifestyle trust benefitsFlexibilityControlControlChoiceEfficientControl AccessAny age Gift but with access - Settlor can take benefits if neededNo further Gift - when you decide not to take benefitsThe final piece of the Trust jigsaw
17. THE TRUSTSingle Settlor, discretionary trustPre-determined dates in schedule two which specify when the policy funds revert to settlor THE IHT TREATMENTInitial gift into trust is a chargeable lifetime transferBut no entry tax if within NRB allowanceDiscretionary trust taxation applies, periodic and exit chargesLIFESTYLE TRUST – KEY POINTSA SOLUTION FOR LIFENo underwriting & no maximum age
18. SOLUTION FOR Mrs StonePolicy Fund A5 Policies (1-5) 2016Policy Fund B5 Policies (6-10) 2017An OMI Investment Bond is segmented into 300 policiesMrs Stone specifies in Schedule Two of the trust deed, how and when she wants the policies to revert to herand so on…Policy Fund C5 Policies (11-15) 2018Policy Fund D5 Policies (16-20) 2019Policy Fund E5 Policies (21-25) 2020Discretionary trust
19. ENTITLEMENT IN 2016Policy Fund B5 Policies (6-10) 2017and so on…Surrender or assignment of policiesPolicy Fund C5 Policies (11-15) 2018Policy Fund D5 Policies (16-20) 2019Policy Fund E5 Policies (21-25) 2020Bare trust for SettlorPolicy Fund A5 Policies (1-5) 2016Discretionary trust
20. ENTITLEMENT IN 2017/2018and so on…Surrender or assignment of policiesPolicy Fund D5 Policies (16-20) 2019Policy Fund E5 Policies (21-25) 2020Bare trust for SettlorPolicy Fund B5 Policies (6-10) 2017Policy Fund C5 Policies (11-15) 2018Discretionary trust
21. ENTITLEMENT IN 2017/2018and so on…Surrender or assignment of policiesPolicy Fund D5 Policies (16-20) 2019Policy Fund E5 Policies (21-25) 2020Bare trust for SettlorPolicy Fund B5 Policies (6-10) 2017Policy Fund C5 Policies (11-15) 2018Discretionary trust
22. ENTITLEMENT IN 2017/2018and so on…Surrender or assignment of policiesPolicy Fund D5 Policies (16-20) 2025Policy Fund E5 Policies (21-25) 2020Bare trust for SettlorPolicy Fund B5 Policies (6-10) 2017Policy Fund C5 Policies (11-15) 2018Date ExtendedDiscretionary trust for Settlor
23. LIFESTYLE TRUST – KEY POINTsThe Settlor’s interestSettlor can defer their entitlement , before the vesting dateOnce a Policy Fund has vested, the options are:Do nothing, the trustees hold the Policy Fund on bare trustTrustees surrender the Policies and pay SettlorThe Trustees assign the Policies to settlor (and if required onwards to another part) Opportunities for future advice
24. AND FINALLY, THE MOST IMPORTANT QUESTION…WHO SHOULD BE TRUSTEES?FAMILYCORPORATE
25. FAMILY TRUSTEES – POINTS TO CONSIDERDo they understand trust law?Can they keep up to date with changes in trust legislation?Settlor and spouse only – divorce / death and remarriage?Children – could they fall out?Does the settlor want their family to know about their financial affairs?* Trustee Act 2000 in England and Wales / The Charities and Trustee Investment (Scotland) Act 2005 / Trustee Act (Northern Ireland) 2001 / Trustee Act 2001 in IOM
26. WHY USE CORPORATE TRUSTEES?Confidentiality Confidence that trust deeds and laws aren’t breachedProfessional and independentContinuity – corporate trustees do not dieNo dilemma selecting personal trusteesNo need to open trustee bank account
27. THE ROLE OF THE PROTECTOROptional roleIndependent overseer of trustees’ actionsPower of veto over some trustee actionsPower to remove current trustees
28. NEW TRUST DECISION TOOLNew Trust Decision Tool is now available on the Old Mutual International website to use with customersThe tool will take you through a few simple questions before it suggests which trust may be suitable for a customer’s circumstances
29. THE TRUSTABILITY HUBFor further help and support Old Mutual International has built a new trust hub, called the ‘trustability hub’ which hosts useful guides, videos and articles. This can be found at:www.oldmutualinternational.com/trustability Choosing a provider with a full range of trust options will help ensure the customer’s needs are fully met and assets are placed within the most efficient trust wrapper. The Trust Decision Tool combined with the Trust Form Finder will help to simplify our Trust proposition and help remove any barriers for advisers. Rachael Griffin, financial planning expert at Old Mutual Wealth
30. TRUST PLANNING – IN SUMMARYThe bond/trust combination is tried and testedFamilies will thank you in years to comeLong-term – on-going feesClients need helpYou are best placed to provide
31. OLD MUTUAL INTERNATIONAL – THE EUROPEAN WEALTH BONDFor Financial Advisers Only.
32. THE EUROPEAN WEALTH BOND – CUSTOMER BENEFITSWider investment universe – not restricted to collectivesAccess to direct equities, bonds and giltsPossibility for lower Total Expense Ratios (TERs)All the tax and trust benefits of the EWB, providing a joined up solution32
33. OFFSHORE BONDS – WHAT HAVE THEY DONE FOR YOUR CLIENTS?HELP YOUR CLIENT TO MANAGE WHAT LEVEL OF TAX IS PAID AND WHENSELF DETERMINATIONSAVING BANDDIVIDEND TAXATIONRETURNS - GROSS ROLL-UPSAVING BEYOND PENSIONSASSIGNMENTS
34. ANY QUESTIONS?
35. INT15-1172 / November 2015www.oldmutualinternational.comCalls may be monitored and recorded for training purposes and to avoid misunderstandings. Old Mutual International Isle of Man Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0)1624 655 555 Fax: +44 (0)1624 611 715. Licensed by the Isle of Man Financial Services Authority. All promotional material is approved by Old Mutual Wealth Limited. Old Mutual Wealth Limited is authorised and regulated by the Financial Conduct Authority. Financial Services register number 165359. The rules made under the Financial Services and Markets Act 2000 (as amended) for the protection of retail clients in the UK do not apply. Old Mutual International Isle of Man Limited is a member of the Association of International Life Offices. Old Mutual International is registered in the Isle of Man as a business name of Old Mutual International Isle of Man Limited. Old Mutual International Ireland Limited is regulated by the Central Bank of Ireland. Registered No 309649 Administration Centre for correspondence: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU Tel: +353(0)1 479 3900 Fax: +353(0)1 475 1020. Head Office Address: Iveagh Court, 6-8 Harcourt Road, Dublin 2, Ireland. VAT number for Old Mutual International Ireland Limited is 6329649S. Registered Office: Arthur Cox Building, Earlsfort Terrace, Dublin 2, Ireland. Old Mutual International is registered in Ireland as a business name of Old Mutual International Ireland Limited.Your investment may fall or rise in value and you may not get back what you put in.This document is based on Old Mutual Wealth’s interpretation of the law and HM Revenue and Customs practice as at November 2015. We believe this interpretation is correct, but cannot guarantee it. Tax relief and the tax treatment of investment funds may change. The value of any tax relief will depend on the investor’s individual circumstances. The tax treatment and efficiency of these options will depend on the individual circumstances of each customer. Tax rules and their application may change in the future.Full details of the Old Mutual International Offshore Bond can be obtained from your Old Mutual Consultant or through Old Mutual Wealth’s head office.