AMINEWS MAURITIUS | NOVEMBER 2012
 
 
CONTENTS:
Mauritius Trusts – An Avenue for UK Residents
 
Today, offshore companies and trusts are no longer effective for reducing taxes for most UK-domiciled individuals and residents. However, life insurance policies may be placed in an offshore trust structure for UK tax purposes, which makes offshore trust structures very effective for structuring taxes indefinitely.
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Current Situation in the UK
 
Because of poor inheritance tax planning, UK taxpayers waste millions of pounds that could be saved through better use of their life insurance policies. Under current tax rules, life insurance policies are usually free of personal liability; however in certain circumstances the life insurance payout may be subject to inheritance tax, which is currently 40%. Placing a life insurance policy under trust creates a more favorable structure for this particular tax.

If a life insurance payout is made directly to a beneficiary, the inheritance tax of 40% arises on the payout amount. However, by placing the insurance policy in trust, the funds can be held outside the estate of the policyholder and is then available to the beneficiary free of UK inheritance tax.

Furthermore, the trust can designate the spouse, children and grandchildren of the policyholder as potential beneficiaries. The funds are available to each generation in turn and will not be subject to UK inheritance tax as the trusteeship passes on to the next generation.
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Trusts
 
Trusts are legal agreements that can be used as a tool for planning investments. Many high net worth individuals use trusts to accomplish their financial objectives, including tax, succession and estate planning, confidentiality and asset protection.

The parties to an offshore trust are generally the settlor, trustees and beneficiaries. The settlor is the person wishing to form the trust and the trustee is responsible for the administration of it. Beneficiaries are designated by the settlor and are normally family members of the settlor.
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Mauritius Trusts: A Useful Tool for UK Residents
 
Typical offshore trust structures take the following forms:
  • A Mauritius trust holding a bank account for portfolio investment; and
  • A Mauritius trust holding shares of a Mauritius global business company that invests in property, gold and commodities.
Many high net worth families around the world hold listed and unlisted investments through the above-mentioned structures, which allow for succession planning by avoiding forced heirship provision.

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Reasons to Use a Mauritius Trust
  • There are no currency exchange controls in Mauritius.
  • Investments through Mauritius are not subject to CFC and thin capitalization rules and transfer pricing regulations.
  • There are no capital gains, donations or inheritance taxes in Mauritius.
  • A trust can elect to be non-resident and is then exempt from tax in Mauritius.
  • There are no registration or filing requirements; thus full confidentiality is easily maintained.
  • By putting a life insurance policy in trust, the assets will be held and controlled outside of UK and, unless remitted to the UK by way of distributions, is taxable only when in the hands of the beneficiaries.
  • Trust assets fall outside the estate of the settlor, minimizing or eliminating estate taxes arising on the death of the settlor.
  • Fraudulent disposition provisions for protection against creditors are embedded in Mauritius trust law; creditors may bring no action later than 2 years from the transfer of assets into the trust.
  • Protection against forced heirship rules and non-recognition of foreign judgments is provided under the Mauritius Trusts Act.
  • You have access to a wide range of international investments and the benefits of existing treaties.
  • Mauritius is in the GMT +4 time zone, making same-day service available from our London office.
Placing your life insurance policy in a Mauritius trust enhances your inheritance tax structure and protects your assets.
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Amicorp (Mauritius) Limited
 
Amicorp (Mauritius) Limited is licensed by the Financial Services Commission of Mauritius to provide trusteeship services, and provides administration services and can act as qualified trustee. We will be happy to assist you in establishing and managing your trust, including the preparation of accounts, liaising with the bankers, and so on.
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For more information contact:


Veekashsing Sookun
Amicorp Mauritius
V.Sookun@amicorp.com

 
 
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