Isle of Man-based Boal & Co has announced the launch of a "Spousal Bypass Trust". The trust ensures that QROPS death benefits are instead paid out to a trust, completely separate from the spouse's taxable estate.
Commenting on the launch, Managing Director Gary Boal explained: “One of the many benefits of QROPS (overseas pension transfer schemes) compared with UK pensions is the ability to bestow a pension fund on death. Scheme members who retire abroad are not subject to the 55% UK tax charge which applies to members with UK pension schemes."
According to Boal “Member payment charges”, including the 55% special lump sum death benefits charge, are not applicable to members of QROPS schemes unless the member is UK-resident at the time of payment, or has been UK-resident in any of the 5 complete tax years preceding payment.
He adds: “Whilst it is true to say that QROPS funds are also free of inheritance tax (IHT) on a member’s death, payment of a member’s QROPS fund on death to, for example, his or her spouse could nonetheless create an IHT liability on the eventual death of the spouse. Use of a Spousal Bypass Trust can ensure that QROPS death benefits are instead paid out to a trust, completely separate from the spouse’s taxable estate, taking IHT out of the equation not just on the death of the member, but also on the subsequent death of the spouse.”
Boal & Co’s QROPs proposition now includes provision of specimen trust wording to establish the Spousal Bypass Trust, and links to (optional) professional trustee services.
Boal & Co received a Special Award for Technical Innovation in the QROPS sector at the 2011 Professional Adviser International Fund & Product Awards, see www.offshoreawards.com
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