Pensions, estates, and trusts
Wealth creation and tax planning
Effective April, 2006 the pension schemes in the UK are being modified with increased contribution limits and investment flexibility. Structured correctly, UK pensions can be advantageous to US taxpayers in the UK. Given the correct profile the UK pension could form a significant part of a portfolio.
We provide advice on using UK pension rules if applicable, to reduce UK inheritance tax liability without the use of complicated trust structures. We provide advice on tax-efficient structuring of an US expatriate’s 401-K or IRA plan assets to reduce tax costs, allow access at age 55, or—in specific circumstances—an enhancement to the plan.
Estate planning
We offer estate planning services for US citizens based in the UK, with strategies to minimize the tax to the government and maximize the estate to the beneficiaries of the taxpayer. We emphasise efficient use of estate tax and gift tax exemption, and the growth of assets outside the estate.
We can work closely with the financial advisor of the client, coordinating a financial plan to maximize the net worth of the client: the focus is on wealth creation for the generations. We use tax, financial, and estate planning tools that result in creation of assets that fund the estate tax liabilities at no additional cost. We can connect you to estate attorneys who can produce the documentation required.
Compliance for trusts
A Foreign Trust with US beneficiaries has an obligation to file US tax returns for the trust. In case of a Grantor trust the beneficiary is considered to be the owner of the trust and therefore is taxable on all the income of the trust.
In case of a non-Grantor trust the beneficiaries are taxable on the distributions made during the year. If the distribution exceeds the current year income the excess distributions is taxed on the earliest year income of the trust. This means that income earned by the trust in the earlier years is taxed first with additional interest and penalties due to deferral of income. The income of the trust needs to be computed under US tax principles.
We have seen situations where non-reporting of a foreign trust could mean the loss of the entire trust principal to US taxes, interest and penalties.
We specialize in the analysis of the potential exposure of the trust to US tax authorities, the determination of the trust income under US tax principles and the minimization of exposure to penalties and interest. (Note that matters can be complicated where the trust owns a company, which in turns owns the assets.)
US Tax Solutions LLP offers an analysis of your tax situation to identify tax planning opportunities. We do NOT offer financial products to our clients; our role is to provide tax advice on how your tax situation may be improved.