What will happen to my foreign assets when I die and will my estate have to pay tax on these assets?
This will depend on a number of factors including:
- Where you are domiciled
- Where the asset is situated
- What your English will says
- Whether you have a will in the jurisdiction the asset is situated
Where are you domiciled?
You may not realise that UK inheritance tax is potentially payable on all of your worldwide assets if you are ‘domiciled’ in the UK at the date of your death. This is regardless of whether you have to pay an inheritance tax to the country where your overseas assets are situated. In some instances, there are tax treaties to prevent you paying tax twice but this is not always the case.
The concept of ‘domicile’ is different to ‘residence’. Your residency status affects what tax you pay on your income and gains during your lifetime. It is entirely possible to be resident abroad but still remain domiciled in the UK, thus falling into the net for UK inheritance tax on your worldwide assets. For that reason, it is important to take professional advice on your potential domicile status.
Where is the asset situated?
In some countries, like France and Spain, ‘forced heirship’ rules provide that children are entitled to a certain proportion of your estate. This is the case even if your spouse survives you. This is in stark contrast to English law which allows you to leave your assets in whatever way you choose.
The general rule has always been this: if the asset is fixed overseas and not moveable (like a house or land) then the law of the country where it is situated applies.
What does your English will say?
It is possible that your English will deals with your ‘worldwide’ estate or specifically mentions your overseas assets. Take care when attempting to deal with your overseas estate by using your English will. Remember that, if the laws of the country where the asset is situated conflict with the direction in your will, it is possible that your will could be ineffective in dealing with those assets.
However, if your overseas assets are held in a country signed up to the EU Succession Regulation 650/2012 then there is a glimmer of hope for those of you who wish to get around the law of the land in favour of English law. So long as you can show a close enough connection to England then even if you are a resident abroad it will be possible to choose, via your will, English law as the law of succession to apply to your overseas assets.
Do you have a will overseas?
Having a will in each jurisdiction where you hold assets is nearly always the right thing to do as it will inevitably speed up the process of dealing with your estate in each country. You should take advice in that jurisdiction and, if it is a country signed up to the EU Regulation, then you should make the relevant statement in that will to apply English succession law.
You should always take care if you have wills in a number of jurisdictions to make sure one will does not cancel the other.
If you want to plan for the succession of your overseas assets, contact our team today for a free initial telephone conversation. Call 01752 203500, email enquiries@GAsolicitors.com or use our online contact form.