While international bonds may not be on everyone’s radar, they can offer particular benefits when wealth and estate planning, says David Findlay of Utmost Wealth Solutions.
Policyholder protection, strong regulation, tried and tested products, tax efficiency – just some of the key considerations when assessing solutions for your clients’ financial planning needs. However, do international bonds feature in your deliberations, or does the sector still retain a slight element of mystique or unfamiliarity?
As with many facets of the financial services market, over the last 20 years the international life assurance sector has undergone significant change. It has matured into a highly-regulated market that can give advisers and paraplanners an extra string to their bow when considering robust solutions for their clients’ wealth management needs.
Over this period of time, international bonds from jurisdictions such as the Isle of Man have developed into modern products that stand comparison with their onshore counterparts, but have a number of key benefits that should be considered when assessing the most appropriate solutions for high-net-worth clients.
While international bonds may be considered to be the preserve of an internationally mobile clientele, they can provide equally legitimate wealth and estate planning opportunities for UK-based clients and those who advise them.
Why should international bonds be considered as part of the financial planning arrangements for UK residents?
- Virtually tax-free investment growth*
- Control over the timing of tax liabilities and how much tax is paid.
- Non-UK situs for inheritance tax planning issues
- Access to a wide range of investment opportunities including full discretionary management.
In addition to these key benefits, international bonds issued from the Isle of Man can offer:
- Policyholder protection from a reputable and highly-regulated jurisdiction
- High-quality service from an established sector.
To ensure clients’ financial affairs are handled in a transparent and robust manner, product providers have representation on various associations and bodies to bridge the gap between industry and the various tax and regulatory authorities. These include the Manx Insurance Association (MIA) and Association of International Life Offices (AILO). These associations ensure companies are kept up to date with compliance developments in the taxation and reporting landscape.
In conclusion, international bonds can be highly appropriate for the wealth management, retirement and estate planning needs of UK-based high-net-worth clients.
* Growth in an international bond is largely tax free with the exception of withholding tax on certain overseas investments, which is deducted at source.