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Inheritance Tax Planning

Pierre Dubois, a French citizen and resident, owns valuable works of art situated in several galleries and museums in the UK. The value of these works of art would certainly exceed the inheritance tax threshold for UK inheritance tax purposes, if Pierre would die in the very near future.

Pierre wonders how he can avoid exposure to UK inheritance tax.

Suggested solution:

If Pierre would die whilst owning these works of art in the UK, then UK inheritance tax liability will certainly arise. One way to avoid this is to create an offshore trust, for example in the Isle of Man. The offshore trustees can then establish an offshore company to take ownership of the works of art. If this two-tier structure is established, then the works of art concerned can be brought into and enjoyed in the UK without any exposure to UK inheritance tax as the trust property will consist of the shares in the offshore company. For UK tax purposes, these shares are exempt property, as they are situated outside the UK.

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