Planning for deemed domicile with excluded property trusts

With 5 April only a few weeks away, it is time for long-term UK residents to think about whether they are coming up to their deemed domicile date for UK inheritance tax purposes. Those who arrived between 6 April 1998 and 5 April 1999 will become deemed domiciled on 6 April 2014. For US persons facing deemed domicile, there is a planning opportunity with excluded property trusts to preserve the difference between the large US federal estate tax exemption and the relatively small UK nil-rate band amount.

It may seem as though the new year has just begun, but time is running out for pre-5 April planning. This is particularly true for any non-domiciled UK residents who will become deemed domiciled in the UK for inheritance tax purposes on 6 April 2014. Anyone tax resident in the UK in 17 out of 20 UK tax years (remembering that the tax year runs from April to April and that partial years count) will be deemed domiciled in the UK for inheritance tax purposes from 6 April of the 17th year of tax residence. In practical terms, this means that UK inheritance no longer applies solely to UK situate assets, as is the case for non-domiciliaries, but rather to your worldwide estate…

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