1. Life Assurance in Estate Planning for UK Clients STEP Benelux Lunch & Learn January 2016

2. Contents 1.Non-Dom (R)Evolution 2.Draft Finance Bill 2016 3.Questions for Clients 4.An Estate Planning Toolkit 5.Closing Remarks

3. Non-Dom (R)Evolution What has Changed?

4. Recent Evolution of Non-Dom Taxation 2007/8 and prior UK resident non-domiciled individuals (RNDs) not subject to tax on overseas income or gains if not remitted to UK. Remittance basis in some cases automatic.

5. Recent Evolution of Non-Dom Taxation 2008/9 From 6 April 2008, Remittance Basis Charge (RBC) of £30,000 for RNDs resident in at least 7 of the previous 9 tax years.

6. Recent Evolution of Non-Dom Taxation 2012/13 New £50,000 charge for claimants who have been resident in the UK in at least 12 out of the previous 14 tax years.

7. Recent Evolution of Non-Dom Taxation 2015/16 RBC for longer-term RNDs increased to £60,000 if 12 of last 14 years. New £90,000 RBC if 17 years of last 20.

8. Recent Evolution of Non-Dom Taxation 2017/18 Further restrictions on the availability of the remittance basis planned. £90,000 RBC will become redundant.

9. Draft Finance Bill 2016 The Future, and Opportunities using Life Policies

10. What’s in Store? April 2017 No permanent non-dom status (15/20 rule) Different rules for Arriving and Returning UK RNDs Changes to trust taxation =Deemed domicile for all purposes after 15 tax years =Six tax years abroad to lose deemed-dom status under 15/20 rule =Proposal that actual doms lose IHT domicile on later of: - Six years of non-residence, and - Acquisition of foreign domicile of choice

11. Offshore Trusts Settlor Interested Offshore Trusts Those established while settlor was not deemed-dom ‘protected’ Taxed on benefits received Could be made to apply to all non-doms Returning RNDs Treated as UK domiciled when UK resident Offshore trust established while non-dom not ‘protected’ while UK resident

12. New rules for Arriving RND: ◦RND settles £5m onto an offshore trust in 2014 ◦Trust assets now worth £4m ◦Trust wound up in 2017 and assets appointed to the UK RND ◦Tax payable on £4m? A tax on losses and clean capital? Offshore Trusts

13. Consultation: ‘Reforms to the taxation of non-domiciles’ 30/09/2015 to 11/11/2015 Draft Finance Bill 2016 clauses published Responses to Consultation due “early 2016” together with detail on income tax and capital gains tax measures Trust changes delayed to Finance Bill 2017? Where Are We Now?

14. Questions for Clients

15. Current domicile status? Deemed domiciled under current rules? How many years in the UK? Split years? Breaks in residence? Could you be deemed-dom from 6/4/2017? Any offshore trusts? Need for income in UK? What is your plan for tax on worldwide income and gains? Have you considered the possibility of worldwide estate being subject to UK IHT at up to 40%? Questions for Clients

16. Client with estate worth £20m ◦40% IHT on death ◦Potential liability of c.£8m (less available NRB and reliefs)

17. Questions for Clients Client with estate worth £20m ◦40% IHT on death ◦Potential liability of c.£8m (less available NRB and reliefs) Inheritance Tax likely to occupy larger part of UK planning

18. An Estate Planning Toolkit For UK Domiciles and Future Deemed Domiciles

19. Client objectives? ◦Provide for next generation ◦Retain access to funds ◦Retain control ◦Reduce IHT exposure ◦Have cake and eat it Questions for Clients

20. An Estate Planning Toolkit Loan Trust Discounted Gift Trust Accumulation and Maintenance Plan Flexible Legacy Plan

21. Retaining Access Loans & Discounts

22. Tax-deferred income’of up to 5% per annum from life policy Return of original capital at any time Gradual reduction in investor’s estate if income spent Life policy growth is free from IHT for settlor Beneficiaries can be changed Loan Trust with a Life Policy: Advantages

23. Immediate reduction in potential IHT liability at death Initial investment not subject to (further) IHT after 7 years Investment growth accumulates outside settlor’s estate Tax-deferred‘income’of up to 5% per annum from life policy Discounted Gift Trust: Advantages

24. Retaining Control Structured Gifts

25. Is control the preserve of the trust? ‘ I want to make gifts to my children but am worried that they may spend the money unwisely. ’

26. Unlimited contributions Structured access to benefits Some of the advantages of pre-2006 trusts without associated IHT disadvantages Assets removed from estate for IHT and protected until donee sufficiently mature The Accumulation & Maintenance Plan

27. Potentially Exempt Transfer for IHT Donor controls beneficiary’s access 5% withdrawals may support educational needs No chargeable event on death during suppression period? If beneficiary dies during suppression period, policy value for IHT purposes may be discounted The Accumulation & Maintenance Plan: Advantages

28. The Accumulation & Maintenance Plan Legacy Planning Policy 1 £500,000 Policy 2 £500,000 Policy 3 £1,000,000 Policy 4 £1,000,000 Policy 5 £1,000,000 Granddaughter’s further education Grandson’s further education Daughter’s future retirement Son’s future retirement Gift to Daughter

29. Flexible Legacy Plan Catering for Change

30. Little or no IHT to pay at inception Donor controls donee’s access Flexibility to cope with changing circumstances Control over investments/investment strategy 5% withdrawals may support educational needs No chargeable event on death during suppression period? If beneficiary dies during suppression period, policy value for IHT purposes may be discounted Flexible Legacy Plan: Advantages

31. Closing Remarks

32. The New Face of UK Estate Planning Profound changes underway to taxation of UK RNDs New challenges Types of RND

33. The New Face of UK Estate Planning Profound changes underway to taxation of UK RNDs New challenges Types of RND (need to review position?) Trust changes Prospect of tax on worldwide income and gains Prospect of inheritance tax on assets worldwide Future changes to deemed-dom time frame?

34. The New Face of UK Estate Planning Profound changes underway to taxation of UK RNDs New opportunities for Doms and Future Deemed Doms Loans Discounted Gifts Gifting with Retention of Control Control in Changing Circumstances

35. The New Face of UK Estate Planning Profound changes underway to taxation of UK RNDs Life assurance can still help with: Segregation issues Preservation of clean capital Remittance Basis Charge Deferral Access to capital Simplification of reporting Breadth of investments Access to UK investments WHT savings Collateral for loans Portability

36. Disclaimer This presentation was produced by Lombard International Assurance S.A. Its content is intended for informational purposes only and is not to be construed as a solicitation or an offer to buy or sell any life assurance product. Neither is the information contained herein intended to constitute any form of legal, fiscal or investment advice. It should therefore only be used in conjunction with appropriate independent professional advice obtained from a suitable and qualified source. No representation or warranty, whether express or implied, is made in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning Lombard International Assurance or its group companies. All information in this presentation is based on Lombard International Assurance’s understanding of the laws of Luxembourg and of any other jurisdiction referred to herein, as in force at the date of this presentation. Lombard International Assurance is not liable for the consequences of any change in law or revenue practice arising at any time close to or after the date of the presentation. Lombard International Assurance S.A. is registered at 4 rue Lou Hemmer, L-1748 Luxembourg, Grand Duchy of Luxembourg, telephone +352 34 61 91-1. Lombard International Assurance is regulated by the Commissariat aux Assurances, the Luxembourg insurance regulator. Copyright © 2015 Lombard International Assurance S.A. This presentation may not be reproduced in whole or in part or circulated to persons other than the attendees of this presentation without Lombard International Assurance’s prior written consent.

37. Presentation title | Month Year Lombard International Assurance S.A. www.lombardinternational.com Head office 4 rue Lou Hemmer L-1748 Luxembourg Grand Duchy of Luxembourg Tel +352 34 61 91-1 Fax +352 34 61 90 Italian Branch/Sede secondaria italiana Piazza San Marco 3 I-20121 Milano Italia Tel +39 02 3670 5260 Fax +39 02 3670 5263 Representative offices in ROME | GENEVA | LUGANO | ZURICH R.C.S. Luxembourg № B 37604 VAT LU 15902470 Tax № 1991 2204 696 P.IVA/Registro Imprese Milano n. 08441540963 Iscrizione Albo IVASS della Sede secondaria italiana n. I.00121