If you are a UK resident who owns assets, including properties, in multiple countries, it is crucial to understand how to administer your Will effectively. This involves understanding key concepts such as domicile, the importance of a foreign Will, the process of administering the estate, and the tax implications involved.
Understanding domicile
Domicile is a key concept when dealing with Wills and assets abroad. It is different from residence and is determined by various factors such as where you were born, where your father was born, where you have lived, and where your assets are located.
The domicile of the testator (the person making the Will) can significantly impact how the assets are treated upon death.
If you are domiciled in England and Wales, you can make a Will in England with an English lawyer and state that you want it to deal with all your property, wherever that property is located in the world.
Alternatively, you can limit your English Will to deal with your English assets only and then make Wills in other countries to deal with the assets in those other countries.
The importance of a foreign Will
While it is not necessary to make a foreign Will or a Will to deal with your assets abroad in other jurisdictions, it may be advisable to do so. The main benefit of having a foreign Will is that a Will prepared by the lawyers in the particular jurisdiction will have been done so with knowledge of the laws in that jurisdiction.
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 said you want to happen to those assets in your English Will.
Administering the estate
Delays in the administration of the estate are common when there is a single Will in a worldwide estate. This is caused by the English Will having to go through the probate process here, as well as the grant of probate then having to be presented in the foreign country having had the expense of being notarised/legalised to be acceptable to the foreign courts.
Therefore, 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.
Tax implications
When it comes to Inheritance Tax (IHT), if you are England & Wales domiciled then it can apply to your worldwide assets. 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.
Administering a Will with assets abroad can be complex, but it’s manageable with the right knowledge and advice. The goal is to ensure that your assets are distributed according to your wishes, regardless of where they are located.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.