Canada Life International has launched its Wealth Preservation Account (WPA) as an option for reduci...
Canada Life International has launched its Wealth Preservation Account (WPA) as an option for reducing inheritance tax (IHT) liabilities.
The WPA allows individuals to make a gift of capital while retaining periodic access to cash if needed in a flexible and IHT efficient way.
It is intended that the WPA is exempt from income tax on pre-owned assets and outside the charge to capital gains tax, while minimising income tax and IHT that may become payable in the future.
The underlying investment is a life assurance policy that can link to Canada Life International's own suite of funds and also external funds from third-party providers.
Tony Parry, managing director, Canada Life International, said: "The WPA gives the individual the ability to gift assets away, but they can continue to have access to the capital should circumstances change. For example, an individual may have hefty nursing home care to fund or want to protect family wealth for their children if there is a relationship breakdown.
"Because we never know what is around the corner, the WPA provides the necessary flexibility that is just not available with most other products such as discounted trust arrangements."
The WPA consists of a series of single premium life assurance policies, which are settled on a bare trust and discretionary trust arrangement.
Each of the policies has a finite term until a known maturity date.
The legal title of the policies is assigned to an initial bare trust from outset. At the same time, the individual settles all equitable rights under the policy on a discretionary settlement. This discretionary settlement comes into effect the day after the initial trust.
It is this division of the legal title and equitable rights under the policy that is important, to ensure the whole arrangement is not caught by the charge to income tax on pre-owned assets.
The proceeds of maturing policies are available for the individual by way of a reversionary interest under the settlement. However, the trustees can extend policies should the maturities not be required.
The minimum initial investment is £50,000 and there is no maximum. Additional investments are not permitted.
Established in 1987, Canada Life International is based in the Isle of Man.
And then prepare yourself
Aims to double client base
Work with wealth management team
Reduces chances of rate hike
'Following the letter, but not the spirit, of the rules'