Estate planning
Excluded Property Trust
Established by a settlor who is not UK-domiciled and not deemed domiciled, holding non-UK situs assets that remain outside the UK inheritance tax net even if the settlor later becomes deemed domiciled.
Glendalough, Co. Wicklow · Superbass, CC BY-SA 4.0
Who it is for
Non-domiciled clients arriving in, or resident in, the United Kingdom
What it does
- Must be settled before deemed domicile arises
- Holds non-UK situs assets only
- Protects excluded property status through later domicile changes
- Requires specialist tax advice before execution
The product in full
This trust exists for one narrow set of facts, and outside those facts it does nothing at all. It is settled by someone who is not UK-domiciled and not deemed domiciled, and it holds non-UK situs assets only. Property meeting both conditions is excluded property, and it stays outside the UK inheritance tax net even if the settlor later becomes deemed domiciled through long residence.
The timing is the entire product. Deemed domicile arrives on a residence test, and the trust must be settled before it does — a settlement made the day after is not an excluded property trust and cannot be made into one retrospectively. Advisers dealing with clients who have recently arrived in the United Kingdom are working against a clock that started before they were instructed.
The situs of every asset matters as much as the timing. UK situs property inside the trust is not excluded, so what goes in has to be checked asset by asset rather than assumed. Specialist tax advice is a precondition of execution, not a recommendation attached to it: we will not proceed without confirmation that the client has taken it.
Literature
Product literature is issued to appointed intermediaries. Ask your underwriter, or request it through the enquiry form.
- Trust deedOn request
- Technical note on excluded propertyOn request
How it works
What happens, in order
From the first enquiry to the point the cover, the contract or the facility is in place.
Domicile status is established by the client’s own advisers
Not UK-domiciled, and not deemed domiciled. In writing, before anything else happens.
The residence clock is checked
How many of the last twenty tax years the client has been UK resident, and therefore how long there is. This is often the binding constraint.
The assets are identified by situs
Non-UK situs only, checked individually. A single UK situs asset inside the trust is not excluded property.
The trust is settled before deemed domicile arises
The date is the product. After it, this structure is unavailable for this client.
The trust is administered with situs discipline
Additions and reinvestments are checked on the same basis for the life of the trust.
The numbers
A worked example
Illustrative arithmetic, so the shape of the product is visible rather than described. Nothing here is a quotation or a projection.
A client in their twelfth year of UK residence
The timing question, written out. The residence figures are the general test; whether they apply to a particular client is for their own advisers to confirm.
- UK tax years of residence to date
- 12
- Deemed domicile generally arises at
- 15 of the last 20 tax years
- Tax years remaining to settle
- 3
- Assets available, non-UK situs
- £2,400,000
- Assets held, UK situsCannot be excluded property, and stays out of this trust
- £850,000
- Settled into the trust
- £2,400,000
- Status if settled in time
- Excluded property, and it survives a later change of domicile
- Status if settled after
- Not excluded property, and not fixable afterwards
Illustrative, and not tax advice — the fifteen-of-twenty test is stated as the general rule, and a client’s own position turns on facts we do not see. Specialist tax advice must be in place before execution; we will not proceed without confirmation that it is.
Which assets can go in
The illustrative holding above, split by situs.
View these figures as a table
| Value | |
|---|---|
| Non-UK situs — Eligible to be excluded property | £2,400k |
| UK situs — Not eligible, whatever the settlor’s domicile | £850k |
Suitability
Where the Excluded Property Trust fits
The cases it answers, the cases it does not, and what an underwriter needs before quoting.
It is the right answer when
- A non-domiciled client who has not yet become deemed domiciled.
- Non-UK situs assets, identified and checked individually.
- Cases where specialist tax advice is already in place.
Look at something else when
- A client who is already deemed domiciled — the structure is not available retrospectively.
- UK situs assets, which cannot be excluded property.
- Any case without specialist tax advice; we will not execute one.
What we need to quote
- 1.Written confirmation of domicile status from the client’s tax adviser.
- 2.The UK residence history, tax year by tax year.
- 3.A schedule of the assets to be settled, with the situs of each.
Questions
What brokers ask us about this product
Can the trust be settled after deemed domicile arises?
It can be settled, but it will not be an excluded property trust. The status depends on the settlor’s domicile at the date of the settlement, and that date cannot be moved afterwards.
What if the trust later acquires a UK asset?
That asset is not excluded property. Situs discipline applies for the life of the trust, not only on the day it is written, which is why reinvestments are checked.
Why do you insist on specialist advice?
Because the whole structure turns on facts about the client that only their own advisers can establish, and because a mistake here is not correctable later. It is a condition of execution rather than a suggestion.
Request information
Ask us about the Excluded Property Trust
The form reaches an underwriter in Dublin. If you are an intermediary, say so and we will route it to the broker desk.