Regular readers will know that I have frequently highlighted the benefits of using a Gibraltar trust, company, or a combination of such structures to achieve tailored client solutions. These vehicles offer flexibility and can address even the most complex scenarios – whether involving large families, valuable multinational businesses, or intricate succession planning.

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However, in today’s increasingly complex international environment, traditional trusts and companies may not always provide a complete solution. Some client circumstances demand a yet more sophisticated approach.

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The Role of Insurance in Wealth Planning

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Life insurance, though sometimes overlooked, can be an effective tool in these cases. While not suitable for everyone, it is becoming an increasingly sought-after and compliant strategy. That said, extreme care and professional guidance are essential – caveat emptor (buyer beware) indeed.

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Consider the following example: A successful entrepreneur in their 30s, based in Europe, wants to ensure that their beneficiaries are not burdened with excessive succession taxes in the event of an untimely passing. A simple yet effective solution could be a life insurance policy designed to pay out a guaranteed sum equal to the potential tax liability.

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But succession planning is often more complex than a single payout. Many clients require structures that preserve wealth not only for their lifetime but for future generations. In such cases, a more comprehensive approach – integrating multiple solutions – may be required.

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International wealth planning typically revolves around five key areas: Privacy, Asset Protection, Tax Benefits, Estate Planning, and Cash or Liquidity. Grouped under the acronym PATEC, these elements form the foundation of effective financial structuring. However, traditional holding structures – such as trusts and companies – may not always provide complete protection.

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Private Placement Life Insurance (PPLI)

Step forward Private Placement Life Insurance (PPLI) – a highly flexible solution that can serve as an ideal holding structure. It can be used as a standalone solution, but importantly, it complements existing holding structures well. 

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PPLI may be defined as an investment-linked insurance policy designed to facilitate tax-efficient growth while complying with a client’s status and domicile. The basic premise is simple. A client or trustee establishes an insurance policy and the insurer opens accounts as required in its name and provides administrative services. Together with client/trustee-appointed investment managers and advisers, the underlying investment portfolio is managed based on an agreed strategy and risk profile. Thus, the insurance company becomes the ultimate beneficial owner of the respective investments while the client/trustee holds an investment-linked insurance policy.

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PPLI structures can accommodate a wide range of asset classes, including cash, equities, companies, and alternative investments.  Advantages accruing to a client when using a PPLI as part of their structure can vary widely depending on their situation. However, key benefits may include tax-efficient growth, optimised estate tax planning and simplified reporting for banks and asset managers.

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I will develop these themes in more detail in future articles. In general, though, combining a PPLI with a trust will provide long-term family protection, succession planning, and privacy – while offering tax efficiency. When properly structured, this approach maximises portfolio growth and ensures robust estate planning within a legally secure framework.

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Choosing the Right Jurisdiction & Partners

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For these benefits to be fully realised, it is essential to establish structures that may include PPLI within well-regulated jurisdictions. Gibraltar meets this standard, providing a secure environment for sophisticated financial planning. At Acquarius, we rely for the life insurance component on Zurich-based 1291 Group, a leader in insurance-based wealth structuring for over 25 years. I appreciate their permission to use the PATEC acronym, which they originally developed. As an aside, the name 1291 pays tribute to the founding year of the Swiss Confederation.

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In summary, structuring client affairs incorporating a PPLI is very flexible but, I stress, is not a one-size-fits-all solution. These structures are complex and should only be considered after thorough legal and tax consultation. However, for the right client, integrating PPLI within a Gibraltar-based structure provides a powerful tool for wealth preservation and succession planning in today’s increasingly sophisticated financial landscape.

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If you or your clients would like to explore this approach further, feel free to reach out for a no-obligation discussion.