Additionally, trusts can offer control over how wealth is used by subsequent generations. However, watch out for additional IHT charges that apply to certain types of trust and, if you have clients who plan to retire abroad, think carefully about whether a trust is an effective way to hold wealth there: civil law countries often do not recognise trust planning.
For a non-dom, foreign assets placed in trust remain outside the IHT net indefinitely (provided they were not born in the UK with UK domicile).
The prospect of a large IHT bill may be one of various reasons to leave the UK. However, remember that even if your client fully intends to remain abroad, UK IHT exposure can continue for up to four years and, even as a non-dom, UK IHT is still due on UK assets.
6. Take out insurance
An insurance policy can be tailored to grant control over how wealth is used by heirs, but without additional IHT.
Alternatively, it can be combined with a trust to pay an income for life, with the remainder passing to the next generation outside of the IHT estate.
Should clients be thinking of moving abroad, insurance can follow them there as, in contrast to trusts, it is widely recognised overseas.
Lastly, where an IHT bill is simply unavoidable, UK residents, or non-residents with UK liabilities, can take insurance as a means of paying the tax when it falls due.
Simon Gorbutt is director, wealth structuring solutions at Lombard International