13Dec

Must Know Information for Inheritance Tax for Expats

Did you know that your beneficiaries may be charged a large amount Inheritance Tax (IHT) bill in case of death. The cost of IHT is almost as equally large as the amount being left. In 2012 to 2013, over £4 billion in inheritance tax was paid to the UK government including sums paid by expats from Hong Kong.

WHO WILL PAY FOR INHERITANCE TAX?

IHT liability is based on one’s permanent residence or domicile. There are two types of domicile: domicile of origin and domicile of choice.

A domicile of choice can be established if you can demonstrate that you have severed all connections with your “homeland” and established permanent ties elsewhere.

A domicile of origin may be challenge to change. Note that if you transfer one more time your domicile of origin will revive until you establish a new one. If you are domiciled in the United Kingdom, IHT applies to your global assets.If you are domiciled elsewhere, IHT is charged on your assets held in the UK.

IHT is charged through three main channels:

  • On your estate in the event of your death
  • On any gifts you present to individuals in the last 7 years of your lifetime
  • On any gifts to the most common type of Trust that you make through your lifetime

Everyone is entitled to make a certain proportion of gifts sans taxation and this is called the “nil-rate band”. Current cost is £325,000 which will remain so unti 2021. All excess above this band is charged at 40%.

Generally, property owners automatically follows the IHT net even before taking into account the total value of their investments. But note that it’s possible to reduce your exposure to this punitive tax.

Inheritance Tax is often treated as a “voluntary” tax because its impact may be mitigated. If you have large amounts of assets but don’t want to leave control over these or make gifts, you can still lower the cost of IHT by carefully planning your will.

LEAVING A WILL

Ensuring one has a will in place is a way to protect your loved ones from incurring impossibly high cost of IHT in the case where substantial assets are involved. For instance, a married couple and civil partners can do what the industry calls a “double up” on their nil rates and this implies that up to £650,000 can automatically pass free of IHT. One common myth about leaving your assets to your spouse or civil partner is that they get half if you die. This is not a fact.

Also, it is crucial to remember that minors cannot inherit money or property which means you need to assign someone to make the arrangements until they turn 18.The courts may choose this person for you if you fail to do so in your will.

Expats often have assets in parts of the world and all these have to go through the courts of the different jurisdictions. Delays can happen if one does not make the necessary arrangements in their will. There are also insurance that covers the cost of inheritance tax. Ask us about it. We help expats in Hong Kong.

6Dec

Reducing the Stress When Travelling with Kids

Travelling with a child is not easy. As much as we would want to travel with the whole family, the logistics can be a great source of stress and anxiety. However, just like with anything in life, just because something is difficult doesn’t mean it’s impossible.

Here are a few tips for stress-free travelling with a child:

Take care of yourself before anybody else.

Monkey see, monkey do. If a child sees or feels anxiety from the parents, then they would most likely copy the mood. It’s important to remember that in order to take care of someone, you have to be in your best condition first. So, make sure that you get enough sleep before the trip and your health is conditioned for travel. Take Vitamin Cs to boost your immunity. With all the stress that’s bound to come, you’re going to need it.

Destination, planning, and packing.

Take into account if the place you’re going is suitable for the child. You can save that Machu Picchu hiking expedition for when your 2-year-old is a little older. Also, make sure that you always have a child-friendly room where you’re going, especially if travelling with an infant.

Create a schedule and book the rooms and the places you want to visit in advance as much as possible. It’s better to have an adjustable itinerary in cases of emergency, rather than have none at all.

Pack just enough diapers and pull-ups for the trip to your destination. Book a room near a pharmacy for easy access to your child’s necessities.

Food, water, and first aid

Keep them fed and hydrated with low-sugar snacks. Make sure all their necessary vitamins, medications and formula are in your carry-on.

Distractions

Bring their favourite toy and keep art supplies within your reach for when your child starts to get bored. Load your tablet or smartphone with their favourite shows.

Keep them close

Save yourself from a heart attack and buy a kid’s harness. It’s weird to see a child on a leash but it will keep them close to you. Before going out, write your contact details on your child’s arm and make them wear a bracelet tag with the same information. At night, make sure that they’re wearing something fluorescent, like a glow stick, to easily spot them in a crowd should they stray.

At the end of the day, we just want our kids to be comfortable, happy, and safe. So, it’s important to meticulously plan a child-centred trip. Making them part of that process ensures satisfaction of not only your child but, also, yourself.

FAMILY INSURANCE

We recommend getting family insurance especially when traveling for an extended period of time. Find an international plan that covers the country you’re visiting. We help expats find the right family insurance for expats living in Hong Kong.