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Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34266
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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A UK citizen also a grandmother of Indian origin , wants to

Resolved Question:

A UK citizen also a grandmother of Indian origin , wants to buy a life insurance policy in India.
She will pay the premiums and her grand children will be the Life Assured.
She wants to create the trust like the ones created by Life Insurance companies in the UK so that the proceeds can go directly to the grandchildren and not be taxed under the inheritance tax.
Is that possible ?
Will the proceeds from such a life insurance policy encased in a trust in the UK be free of inheritance tax to the beneficiary the grand child?
Submitted: 1 year ago.
Category: Law
Expert:  Clare replied 1 year ago.
HiThank you for your questionMy name is ***** ***** do my best to help you but I need some further detailsDo you mean that she will name the grandchildren as the beneficiaries?
Customer: replied 1 year ago.
Yes
Expert:  Clare replied 1 year ago.
OkBut the policies are from Indian Companies.Does she live in India?
Customer: replied 1 year ago.
She stays abroad largely in the UK
Expert:  Clare replied 1 year ago.
But what you are enquiring about is how the policies will be treated in India?
Customer: replied 1 year ago.
No Claire there is no inheritance tax in India the question is when the maturity comes out say after 5 years to the grandchild would the same be taxed under the UK inheritance laws ?The inheritance would be less than GBP 325000 to the grand child.If inheritance tax would be applicable then how does she mitigate it?We understand that life insurance companies incorporated in the UK can create trusts , the query was can a similar trust be created to encase the policy issued by an Indian insurer? Would that ensure no inheritance tax liability on the trust and trustee?
Expert:  Clare replied 1 year ago.
If the grand child is the named beneficiary then the money passes to the grandchild outside of the Will and is not part of the Estate for Inheritance tax purposes.I hope that this is of assistance - please ask if you need further detailsClare
Customer: replied 1 year ago.
Thanks Clare, would the Adult Grandchild be subject to taxation either under the Income tax rules or the Gift Tax rules ?
Expert:  Clare replied 1 year ago.
Not in the UK upon receipt of the monies.
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