Expat Wills – What You Need to Know

Inheritance and tax laws are different for each country. It is essential that expats have an up-to-date and valid Will.

As an Expat, there are numerous issues that complicate the Will-making process. You will need to consider what can be very complicated matters of residency and your domicile status. A Will outlines exactly what you want to happen to your assets when you die. Without a valid Will in place, your hard-earned assets will find themselves distributed under the rules of intestacy. More often than not, this results in your assets being distributed in a way that you would not want and your loved ones losing out.

As an Expat, there are even more reasons to have a valid Will in place. Different countries have different rules around inheritance, property and tax. You need a Will that protects your assets as much as possible and ensures that your wishes are carried out in regards to your estate.

It is vitally important therefore that any Will meets the requirements in the country in which you live and is legally valid. If you do not have the right type of Will in place then you risk the following:

• Your assets may not end up where you want them to go

• It can take several years to sort out the mess across different jurisdictions

• You may end up paying more tax than is necessary. When it comes to making a Will as an Expat there are two separate but intertwined issues you will face:

1. The amount of Inheritance Tax you (or rather your estate) pays when you die – this will be based on domicile and tax treaties

2. Who your assets go to, based on succession law.

Domicile, Residency and Tax Treaties

Knowing your residency status and your country of domicile when you are overseas is important as it has an impact on any Will you make and how it is executed. When it comes to Wills and tax matters for British Expats, much of what happens after your death depends on very complicated distinctions around your country of residence and your domicile.

Your domicile is determined by where you were born, where your parents were born, where you have lived, and where your assets are located.

Even if you are a non-resident in the UK for tax purposes, your domicile may well have not changed and you will still be liable for UK inheritance tax. A change in Domicile is not a simple process, and involves meeting criteria and severing nearly all links to your original country. Due to the significant bearing these matters have on the management of your estate, it is vitally important you speak to an expert solicitor.

Inheritance Tax for Expats

Inheritance Tax in the UK depends on where your assets are. For example, if you are a UK domicile then you will pay Inheritance Tax on your assets worldwide. If you are a non-UK domicile then you will pay Inheritance Tax on your UK assets only, however, foreign countries may also tax your estate. To ensure that you pass on as much as your estate to your heirs as possible, you should consult a professional to determine your situation. In some cases your estate may be taxed in more than one country.

Succession Law and Expats

How Succession Law applies to the distribution of your estate as an Expat depends on the scope of your Will. Some Wills can be valid Worldwide, some everywhere except certain countries or only remain valid in one particular country. You must also consider the willingness of any foreign jurisdiction to recognise a Will made in another country and how this influences your succession planning.
In many European countries, including France and Spain, they operate a system of forced heirship. This means that all, or a proportion of an estate, passes to the protected heirs regardless of the details of the Will. These systems can clash with a UK made Will, which generally gives you the freedom to gift as you want as long as it clearly written in a valid Will.

By Brian Spence

You may also be interested in: Considerations in Living the Expat Life.