FW: Assurance Vie

I am dealing with an estate, for a UK domiciliary, who has been survived by a spouse who has the same domicile and who effected an assurance vie in France. Some of the assets in the assurance vie pass to his daughter and grandchildren and I’m wondering how this will be treated from a UK Inheritance Tax perspective. Do I look through the whole arrangement so that those assets passing away from the surviving spouse, to the daughter/grandchildren are deducted from the deceased’s Nil Rate Band or will HMRC regard the arrangement as falling outside of the scope of Inheritance Tax?

Terry Hill
The Fry Group

You need a copy of the “contrat” in French.

It will not be in the inheritance tax net in any event if it is a contrat de prévoyance à fonds perdu.

If not, it sounds like the standard French capitalisation and savings policy which does work for the entirely different French succession and gift duty rules. Generally under the French system for those contrats it is only transfers into the policy made after the 70th Birthday of the subscriber or life assured which can be brought back into charge for French succession duty purposes.

If it was the surviving spouse who contracted it on the deceased’s life, and paid the premia, there may well not be any diminution of the deceased’s estate or transfer of value in any event.

It will however only be the differential in law which will assist rather than the French tax treatment.

Did the deceased reside in France as a tax resident?

If so there may well be room for manoeuvre under the Succession Duty Treaty as to where the pre CTT estate duty Treaty domiciliation lies. On a research of the full facts, it might still be in France.

Peter Harris
Overseas Chambers