Bloody hell! 40%?!
I wish people would give proper information rather than just spout a single rubbish number.
Here's the real story:
In the US the first $60k is estate tax free, for the rest the tax rates start at 18% for the first $10k, but to get to the 40% bracket you have to have over a $1mil. There is also a potential loophole if you use a trust:
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/Tax/us-tax-us-estate-and-gift-tax-rules-for-resident-and-nonresident-aliens.pdfIn the UK you're far better off. The first £325 000 is tax free, plus if you transfer to your spouse there's no tax. Then if she leaves it to the kids they can get £650 000 tax free.
But wait there's a better way:I have an Interactive Brokers account in the US which means nothing. I buy an ETF (VWRD) that's listed on the London Stock exchange which also means nothing. The ETF is domiciled in Ireland, now that means something as the following clipping from virtually any irish domiciled fund prospectus:
However, any gift or inheritance of Shares will be exempt from Irish gift or inheritance tax once:
1. the Shares are comprised in the gift or inheritance both at the date of the gift or inheritance and at the ‘valuation date’ (as defined for Irish capital acquisitions tax purposes);
2. the person from whom the gift or inheritance is taken is neither domiciled nor ordinarily resident in Ireland at the date of the disposition; and
3. the person taking the gift or inheritance is neither domiciled nor ordinarily resident in Ireland at the date of the gift or inheritance.
So if you don't live in Ireland or leave the shares to someone living in Ireland there is no inheritance tax.
Still not convinced. If you're not holding individual shares but ETFs there's more proof from Irish revenue:
Units in any collective investment undertaking located in the International Financial Services Centre or in the Shannon Customs-Free Airport Zone are exempt from Capital Acquisitions Tax. The exemption also applies to units in Investment Undertakings which qualify for the new collective funds regime introduced by Section 58, Finance Act 2000.
In Ireland they call those funds UCITS funds. What's the full name for VWRD? Yes it's the Vanguard FTSE All-World UCITS ETF. No estate duty. Ireland has done an outstanding job positioning themselves as a destination to invest in.
I normally like justonelap, but that post is dangerous as it would discourage people from taking money offshore, meaning they would have to pay far more CGT one day than if they took their money offshore.
