Dealing with foreign assets in your Will
How do I effectively deal with foreign property and assets in my Will? Do I need a separate Will? Would my foreign Will be valid in the UK?
This article outlines the steps to be taken in making a Will when you have assets abroad.
In an increasingly globalised world, it is becoming progressively commonplace for individuals to hold assets or property in another country or jurisdiction.
This could be in a range of circumstances: you may own a second home in Paris for holidays, a flat in Amsterdam for your son to explore the world and study at the same time, or a villa in Tenerife for future retirement.
It could even be a bank account with a foreign bank or shares in an overseas company.
The underlying principle in each situation is that you must have effective provisions for what is to happen to these properties on your death.
In an ideal world, one would usually be offered or seek advice on succession when buying or acquiring foreign property and make a Will at that point to deal with it.
Though, this is often not the case.
This article highlights the main considerations and how to effectively deal with your foreign assets in your Will.
Do I need a ‘foreign Will’ for my foreign property and assets?If you are of England & Wales ‘domicile’, you can make a Will in England with an English Will writer to cover all of your property, including your worldwide assets located abroad. Conversely, you can restrict the scope of your English Will so that it only deals with your English assets and then make separate Wills in the other countries to deal with the assets you hold in those countries. There is often a danger associated here where an individual inadvertently revokes their foreign Will by failing to restrict the scope of their English Will which causes a host of problems in itself. Whilst it may not be a requirement to make a ‘foreign Will’ or a Will to deal with assets abroad or in other jurisdictions, it may be a prudent choice to do so.
Why should I make a ‘foreign Will’?
Competing lawsThe main advantage of having a foreign Will is that a Will prepared by the lawyers in the relevant jurisdiction will have been done so with the knowledge of the local laws in that jurisdiction. This is important because the laws of the land where your foreign assets are situated will have their own laws concerning valid wills, administration of a person’s estate on death, inheritance laws and tax laws which may not recognise or uphold what you have stated you want to happen to those assets in your English Will. For example:
• English & Welsh law is a ‘common law’ jurisdiction
• European countries are of ‘civil law’ jurisdiction
• Islamic nations are of ‘Sharia law’ jurisdictionCivil law jurisdictions, such as Spain, do not recognise the concept of trusts and this could cause problems, particularly from a tax perspective, if applied in that jurisdiction. Equally, some countries, such as France, have forced heirship rules, which determines which heirs are entitled to receive the assets of a deceased person. Obtaining the services of a specialist in the local jurisdiction of your property increases your awareness of these laws so you can better achieve the outcome you desire.
Delays in administering the estateSuch delays are common where there is a single Will in a worldwide estate. The English Will has to go through the probate process here, in addition to the grant of probate then has to ‘do the rounds’ and be presented in the foreign country having had the expense of being notarised/legalised to be acceptable to the foreign courts. The process can be further elongated by cross border issues regarding domicile, the treatment of the asset types and the application of each country’s domestic rules on inheritance. There is also a risk of losing documents in transit, when sending them abroad. Having separate Wills means the lawyers in those jurisdictions can each proceed with the probate process following death and not have to wait to receive documents from other jurisdictions as part of the probate process.
Is my ‘foreign Will’ valid under English law?If a Will was made outside England and Wales, it will be valid under English law provided it was made in accordance with:
• The laws of the country where it was made; or
• The formalities required by the country where, at the time the Will was made or at death, the testator was domiciled, had his habitual residence or of which he was a national.
What does ‘domicile’ mean and why is it relevant?
Domicile is an important consideration when dealing with any Will abroad.
This is because, the testator’s domicile affects the rules that can apply to the deceased’s assets.
In the UK, there are three types of domicile:
• Domicile of origin;
• Domicile of choice; and
• Domicile of dependence.
As such, ‘domicile’ is not the same as ‘residence’ in England & Wales and can be affected by numerous factors, such as:
• Where you were born;
• Where your father was born;
• Where you have lived; and
• Where the assets are located.
This is significant because where the testator was domiciled before death affects how the ‘type’ of assets a person has are treated on death.
For instance, English & Welsh law provides that where the testator is domiciled in England & Wales, laws apply to both their ‘types’ of assets being either ‘moveable’ (i.e. things that can be touched and are moveable, including art, antiques, classic cars etc.) here and abroad, and ‘immoveable’ (generally, land the building erected on land and rights over land) assets here.
Some countries do recognise and accept that some testators who are not nationals of their country want their own domestic laws applied to the foreign assets in their estates.
For example, in Spain, Spanish laws apply to all aspects apart from inheritance laws, where they accept the laws of the deceased’s own country can apply.
Inheritance tax (“IHT”) is also another important consideration relevant to domicile.
If you are domiciled in England & Wales, IHT can apply to your foreign assets, even if they are situated outside of the UK.
This may result in tax being paid twice on those assets – both in the UK and abroad.
How we can help you
You should seek specialist legal advice on foreign property as it is a specialist topic.
Our comprehensive method of taking your instructions, whether online or over the phone, means we cover whether you own any foreign property and take instructions on how best to include them in your Will.
Land situated outside the UK is immovable property and, as such, its transfer is likely to pass under the local laws of the jurisdiction where the land is situated.
Whilst the land can be dealt with in a Will made under the law of England & Wales, if its provisions concerning the transfer of the property conflict with, or are not recognised by, the local laws, then the latter will prevail.
Accordingly, it is extremely unwise to draft a Will with international scope without taking advice from a lawyer in the correct jurisdiction from both a drafting perspective and also a tax perspective.
There may be a tax treaty in place between England & Wales and the country where your foreign assets are, so it is very important to review this and get appropriate advice when you are making your Will, as there may be ways to mitigate the tax liability.
The best-case scenario is to work with a Will writer who has links or contacts with a firm in the local jurisdiction so that they can work in unison as part of an overall estate plan.
A.D.E Wills are proud to say that we work alongside such experts in foreign jurisdictions.
We work closely with a team of experts who provide estate planning advice for property you hold in any jurisdiction. This is available for expatriates, as well as non-UK domiciled but UK-resident and non-UK domiciled individuals.
If you own Spanish property, we work closely with a team of specialists with 20 years of experience in Spanish Wills and Inheritance.
The team provides reasonably priced, top quality, clear and comprehensive Spanish Wills, together with expert Spanish estate planning analysis and advice (if required), to cover assets situated anywhere in Spain.
Additionally, if you own property in Malaysia, we also work closely with a firm of legal experts in Malaysia who can write your Will and provide specialist legal advice on succession of property, local laws and tax liability to cover assets situated anywhere in Malaysia.
This means that when you write your Will with A.D.E Wills, you can expect the same high quality of service on your Spanish, Malaysian and any other foreign assets you may own, as you would expect from us on your UK property and assets.