It is increasingly common for people to own assets in foreign countries. This can be anything from buying a holiday home to marrying someone from a different country and sharing assets.
However, having property abroad can be a complex issue to deal with when creating your Will. Property and inheritance in other countries can be subject to different laws and regulations than in the United Kingdom (UK), so it is essential to understand how owning foreign assets may influence your Will.
Adding Foreign Assets to Your Will
There are several questions to take into consideration when adding foreign property or assets to your Will. The first is which country was the permanent home of the deceased – this can affect what taxes are taken from your estate after death.
If your permanent home is in the UK, Inheritance Tax is payable on all your assets, no matter where they are located. If your permanent residence is elsewhere, there may be questions about what tax you pay, especially if you still have property or a home in the UK.
Jurisdictions
A complication that can arise when writing a Will that includes foreign property and assets is the difference in legal systems between countries. There are two different styles of law commonly used across the world:
- Common law – This style of law is found in countries including the UK, America, and Canada. In common law, judges have a more active role than in civil law.
- Civil law – This form of law is the most common style of law used worldwide. Civil law puts more emphasis on legislation as the primary source of law.
The main difference between common and civil law comes from the sources of the law and the roles of the judges. Therefore, the different styles of law can interfere with one another when trying to parcel out foreign assets in your Will.
For example, civil law countries do not recognise trusts, whereas common law countries do. This can cause complications with Executorship, which is a form of trust. A Will drawn up in England but then executed in a country such as Spain may affect the amount of taxes paid out of your estate.
Multiple Wills
A potential solution to the complex issue of adding foreign assets to your Will is to create multiple Wills. You can create a Will in each jurisdiction that you have a property in, which comes with several advantages:
- The different Wills would be written by those experienced within those jurisdictions and executed quicker than if there were only one.
- Multiple Wills can be designed for different jurisdictions and make the administration process run smoother.
- Although expensive initially, multiple Wills may save you money as it will make the execution of your estate run smoothly in different countries.
- Some civil law jurisdictions have forced heirship laws in which a person must leave their estate to a specified heir rather than anyone they choose. Multiple Wills can mitigate these laws and ensure your assets go to those you choose.
Multiple Wills are excellent ways to distribute your estate, but there are also some negatives:
- Having multiple Wills drawn up can become incredibly expensive, especially if you have more complex needs or assets.
- If changes are made to one Will and the other remains unchanged, this could unintentionally revoke another Will from a separate jurisdiction and leave assets unaccounted for.
Single Wills
You can still execute a single Will in different countries despite the differences. Some prefer to do this as it is cheaper and simpler, but it could lead to complications down the road. Still, there are benefits to having a single Will:
- A single worldwide Will is much cheaper to draw up.
- Having just one Will makes it much easier to keep track of changes and limits the chances of accidentally revoking a different Will.
- A worldwide Will could still overcome the forced heirship laws in place in certain jurisdictions.
Despite these advantages, a single Will is not advisable when there are multiple assets in several jurisdictions. It may not be the most tax-efficient way to administer the estate and could create more complexities when trying to execute. There could also be delays in settling the estate as the Will goes through probate in several jurisdictions.
Conclusion
Adding a foreign property to your Will can be a complex task. Whether you aim to create multiple Wills or stick with a single one, it is important to seek legal advice to ensure that everything runs as smoothly as possible.
Ready to start writing your Will? Get in touch with The Planning Bee today for a free consultation. Our expert paralegals will walk you through your options and provide you with legal advice for all circumstances.