Mr Rhodes is domiciled in South Africa but works in the UK. He instructed Clarke Willmott LLP in relation to his estate planning.
Mr Rhodes is a successful businessman who was born and raised in South Africa. He remains domiciled in South Africa but has been resident in the UK for the last 10 years.
Although Mr Rhodes planned to return to South Africa upon his retirement he envisaged remaining in the UK for the rest of his working life (approximately ten to 15 years). We advised that this timeframe would eventually involve Mr Rhodes becoming deemed domiciled in the UK for inheritance tax purposes with the result that his worldwide estate would be exposed to UK inheritance tax in the event of his death.
We helped Mr Rhodes create a trust into which he settled assets situated outside the UK worth £2 million.
By settling assets into a trust before becoming deemed domiciled in the UK, Mr Rhodes has potentially made a significant saving to UK inheritance tax. This is because even when Mr Rhodes becomes deemed domiciled in the UK the assets that are now held in trust will be outside the scope of the UK inheritance tax net.
If no action had been taken and Mr Rhodes died after becoming deemed domiciled in the UK, the assets would have been chargeable to inheritance tax at a rate of 40% notwithstanding the fact that they are located offshore.