Life settlement fund

Life settlement funds have been forced into changes in fund structures in a bid to avoid being hit by the full extent of US tax changes.
The Obama administration has clamped down on US companies taking profits overseas for tax reasons in a move that could hurt life settlement funds, which trade in US life policies.
Life settlement fund provider Policy Selection Limited claims the new policy will mean returns made on the maturity of US life policies will be taxed at 30% when they are taken out of the country.
The company, which operates the Cayman Islands-domiciled Assured fund, has set up a company in Belgium in order to exploit the country’s double tax treaty with the US.
By housing ownership of the fund in Belgium, Policy Selection said it could get around the tax change. The gains will not be taxed when leaving the US because of Belgium’s double tax treaty. Policy Selection will then issue the gains as bonds which will reflect the exact amount made by the fund and so avoid being hit by Belgian withholding tax.