In this regular column, Solicitor Abigail Pearson gives five top tips on a range of Private Client topics.
Wills for Cross-Border Estates
When an individual owns assets in multiple jurisdictions, it is vital that all worldwide assets are covered by a Will. You can have more than one Will, each covering different jurisdictions, but each Will must dovetail neatly and not inadvertently revoke another. In a post-Covid world, where countries are considering reforms to their personal tax regimes to raise revenue to recover from the pandemic, it is now more imperative than ever that affected individuals review the tax regimes in those countries where they hold assets and check their existing Wills remain tax efficient and fit for purpose.
1. Do you own assets in the EU?
The European Succession Regulation simplifies succession rules across the EU. A primary example is by allowing individuals to elect the law of their nationality to apply to their EU assets. Whilst the UK is not a signatory, UK nationals can still take advantage and elect for the relevant UK law to apply to their EU assets, circumventing the relevant European succession rules which may not allow complete freedom of disposition.
2. Do you own assets outside of the EU?
It is prudent to take local advice on the applicable succession laws and, in particular, to check whether any “forced heirship” rules apply as these rules would override contrary provisions in a Will.
3. Have you lived in different countries?
It is advisable to put in place a residency and domicile statement to provide evidence of your status under the relevant UK law for succession and inheritance tax purposes.
4. Have you considered the risk of double tax?
Some countries have reciprocal double taxation conventions which seek to prevent inheritance tax being charged on the same property in the country in which an individual is domiciled and the country in which the asset is located. This should be checked and, where relevant, advice taken on how double taxation can be alleviated or avoided.
5. Have you taken coordinated tax advice across all affected jurisdictions?
Take advice on how inheritance taxes apply in the relevant territories to avoid large tax bills in multiple jurisdictions after death. It may be possible to undertake preventative planning now, including organising your estate so that assets qualify for available tax exemptions and reliefs.