In a world that’s becoming increasingly more global every year, it’s easy to find yourself with assets in other countries. Whether you’ve been working abroad and opened up a bank account 💰, married a foreign national 💍, or purchased a holiday home in one of the sunnier countries somewhere on the Med ☀️, all of these scenarios can result in you having assets in more than one country.
Navigating estate planning can be difficult enough when you’re dealing with one country’s set of rules — dealing with two (or more!) can be even more confusing. 😕 It should come as no surprise that different countries have different laws regarding taxation, inheritance, and the recognition of estate wills. But what does that mean for you?
It means planning…and plenty of it. There are a few options to choose from when dealing with assets abroad, however, it’s generally advisable to have a will or trust created in both countries. 🌍 There are several reasons for this:
- The will or trust will follow the laws of the country where the assets are located and the person writing it will have knowledge of what that entails.
- Solicitors in the applicable jurisdictions can proceed with the probate process following death instead of waiting to receive documents from other jurisdictions.
- It can make it easier to settle estates more quickly.
When dealing with overseas assets, it is a good idea to get legal aid when writing your will ✍️. If you choose to have a will created in two different countries, it’s helpful to seek out a lawyer or solicitor familiar with both sets of laws. Or you can always put both your solicitors in contact with one another so they can try and work the kinks out between them.
Another option is to create an international will, which is a great way to consolidate everything into one neat package. Look for law firms that specialise in international and cross-border law for help on that!
Domicile is an important part of dealing with both wills and assets abroad, especially when it comes to inheritance tax. Domicile refers to the country that a person treats as their permanent residence — but the biggest issue here is that many British expats remain UK-domiciled without realising it. Unfortunately that leaves their estate exposed to the UK inheritance tax rate of 40% 😳! Why? Because in the UK, domicile (not residency) determines which law your estate falls under and consequently determines your beneficiaries’ liability for inheritance tax. Depending on the country of the assets in question, you might need to pay inheritance tax there too.
Luckily, the UK does have a few bilateral double taxation conventions (or agreements) with certain countries meaning that your beneficiaries can avoid paying double the inheritance tax.
- Republic of Ireland 🇮🇪
- South Africa 🇿🇦
- United States of America 🇺🇸
- Netherlands 🇳🇱
- Sweden 🇸🇪
- Switzerland 🇨🇭
** France, Italy, India and Pakistan have different rules to avoid double taxation because the treaties were put in place before 1975.
It’s worth noting that non-UK domiciles are only liable to pay UK inheritance tax on assets situated within the UK. You can also try and avoid the complication that is inheritance tax by:
- giving gifts away while you’re still alive
- leaving money to charity
- writing pensions and life insurance policies into trusts as opposed to your will
- leave everything to your partner (provided they are domiciled in the UK)
If this seems confusing to you, you’re not alone. It’s always a good idea to seek out legal assistance when dealing with assets abroad. At Bequest, we work with JP Estate Planning for all our will writing needs, but they also sell trusts. If you have further questions, feel free to send us a message! 👋