SOUNDBITES 2015-2016


8 PRIVATE INSURANCE:


I don’t want them to just blow the lot on cars and whatever else.


CROSS-BORDER PLANNING OPPORTUNITIES [ SIMON GORBUTT ]


Is there something we can do with insurance that can achieve some, if not all, of the benefits of a trust, without its disadvantages? The answer I’d say is, “Yes”. We’re looking at answering the following question, “I’m an individual parent or grandparent and I want to make gifts of assets to the next generation – to my children or grandchildren – but I don’t want them to just blow the lot on cars and whatever else they want to spend it on. Is there a way that I can make the gift but keep control, even if I’m going to a civil law jurisdiction?” Well, with an


insurance contract, you can adapt it or add


other features. And at the end of the day, it is worth remembering that an insurance contract is nothing more than a contract between two parties. So if the insurer and the policyholder want to implement bespoke terms in that contract, they can. Imagine, for example, this: a client takes


a whole of life policy of the sort that I have been discussing so far, and he says, “I want there to be a suppression period” – it’s a number of years that I choose at the outset during which the contract cannot be brought to an end by the holder. But, whoever does hold the contract at that time can access X% of the investment on an annual basis, i.e. there is a trickle of income that is available. I then assign, or give, that policy to the child or grandchild, and the recipient is in the position that he has a policy he can access, but only up to the restricted amount set out by me, and he cannot collapse the insurance contract. So, I’ve achieved a situation where a gift has been made – and control has been maintained over how that recipient accesses the value. At the end of the suppression period that was chosen – maybe ten years, maybe it coincides with an 18th


or 21st birthday – all the rights are


revived and that person can access the full value of the contract.


FROM THE LUXEMBOURG MEETING, MARCH 2016


The ITPA Green Book 2017 www.itpa.org


037


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