Estate Planning for Foreign Assets: Explained

0
739
Estate Planning for Foreign

As global investments are on the rise, it is not uncommon for people to acquire assets in different countries.

These assets can be anything from holiday homes, to corporate shareholdings, to property and businesses.

When you have foreign assets, it becomes even more important to draft a Will. Your Will can ensure that your Estate is administered in the best possible way to the right people and places after your death. Dying without leaving a Will can lead to unnecessary legal complications, which will interfere with the effective distribution of your assets, both domestic and foreign.

There are several things to consider when it comes to Estate Planning for foreign assets.

Worldwide Will & Multiple Wills

Also referred to as a Multijurisdictional Will, a Worldwide Will governs the succession of assets in more than one jurisdiction. This testatory document applies to all the assets of the testator’s worldwide Estate.

This is an easier and cheaper document to draft. It keeps track of all your assets, including the ones not located in the UK. 

It can even help rule out a few of the ‘forced heirship’ rules which would apply to your foreign assets. Under English law, if your loved ones don’t make a claim against your Estate in the event they are not mentioned in your Will, your assets will go to the person to who you mean to transfer them. 

On the other hand, in many European countries, the law doesn’t allow you to exclude certain people in your family, like close family members. This is a case of ‘forced heirship’.

However, a Worldwide Will can make the probate process a lot more complicated and cause huge delays in administering the Estate. 

Holding assets in different jurisdictions also has tax consequences, so when it comes to tax efficiency a Worldwide Will may not be the best solution.

On the other hand, Multiple Wills are made to deal with assets in each country different from the resident country. 

They do have advantages since the lawyers dealing with the different jurisdictions will have proper knowledge about the tax consequences and how to deal with your foreign assets after your death.

However, having Multiple Wills can introduce the risk of inadvertent revocation of a previously signed Will in a different jurisdiction. In such cases, make sure your lawyers are aware of such Wills so they can prevent a revocation.

Making A Foreign Will

It is not mandatory to make a Foreign Will if you have foreign assets but you can’t ignore the advantages.

  • Your beneficiaries and your loved ones will find it easier to deal with your assets since foreign assets can make the process very complicated.
  • The inheritance laws of the UK will be different from other countries. If you have assets abroad, making a Foreign Will can make it easier for your beneficiaries to administer your Estate.
  • Since foreign jurisdictions have different rules regarding inheritance, it is better to make a Will which is valid in that particular jurisdiction. This Will ensure that your assets will go to the people you leave them to.
  • If you have multiple beneficiaries, it is not uncommon for disputes to occur between them, especially if the testator hasn’t left behind proper instructions for the distribution of his assets. Having foreign assets can make the situation even more complicated. Making Wills for your assets abroad can help ease the process for your family members.
  • A Foreign Will can help reduce the inheritance tax your beneficiaries will have to pay after your death.

While it is usually advisable to make separate Wills to deal with your assets abroad, each situation is unique so make sure you consult lawyers in the places where your assets are located to find the best solution.

You can write a Last Will & Testament including your international assets easily with the help of reputed services like ELM Legal Services. Their legal professionals will help you find the best solution to deal with your assets abroad.

Importance of Domicile

Under English law, every person has a ‘domicile of origin’. 

This ‘domicile of origin’ is usually tied to the father’s domicile. It also depends on factors like your birthplace, your place of residency and where your assets are located. 

A testator’s domicile is very important for their Will and plays a major factor in how assets are administered after death. 

If you are domiciled in England and have assets in other countries, your Will can be considered for those assets. But the treatment of your assets will depend upon the inheritance laws of the other countries.

If you are domiciled abroad and have assets in England, these assets will be treated according to English law even if you have a Foreign Will.

To have your executor deal with the assets which are located in England, your Will should be admissible for probate

If a non-habitual resident dies without a Will, further evidence will be required before their Estate can be administered. 

There are several tax implications to consider if you have foreign assets. If someone who is domiciled in the UK decides to transfer some of the assets to someone who is not domiciled in the UK, the tax implications can be severe if you don’t take proper precautions.

EU Succession Regulation (Brussels IV)

The Brussels IV clause states that the law which applies to your Estate will be the law of your habitual residence.

For example, if you reside in England and have assets in a European country like Spain, the English law will apply to your Spanish Estate after you die.

This law helps in the faster settlement of the Estate. It also helps people to make plans for their succession after their death. 

However, it is recommended you include an additional ‘choice of law’ clause in your Will in the event of any unexpected legal complication.

Conclusion

Make sure you seek a professional’s advice if you find specific issues regarding foreign assets applying to your situation. This will help you resolve any tax-related or legal issues which will otherwise interfere with the distribution of your Estate.