Effective Estate Planning For UK Expats Living Abroad
LEARNING OBJECTIVES
We provide high quality, relevant and up-to-date financial advice to British Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How estate planning works for non-UK residents
Understanding of how other countries interpret UK wills
Vital succession considerations
Why trusts can help you
None of us like to think about what will happen after we pass away, but ensuring that you have proper estate planning in place is essential if you don’t want to leave your loved ones with unnecessary inheritance tax burdens.
Estate planning is even more critical for British expats. Once you move abroad inheritance and succession laws become even more complex. If you are planning to leave assets behind, you will no doubt want to ensure that whatever you pass down is subject to as little taxation as possible, and that your estate is distributed according to your wishes.
Although the additional challenges and complications of expat estate planning can be daunting, The Wealth Genesis are experts at helping expats protect their assets when moving abroad.
Cross Border Estate Planning
As an expat, you may be subject to different inheritance tax laws in the UK. It’s important to be aware of how these laws may affect your heirs and their access to what you wish to leave to them.
Some important considerations include:
01 Forced Heirship
Many countries including France, Spain, Portugal, Malta and Cyprus impose a ‘forced heirship’ policy as part of their succession laws. This means that your estate could be automatically divided between your spouse and children – overriding what you may have stated in your will.
This can be avoided in some cases thanks to a law known as ‘Brussels IV’ which will enable you to opt for British inheritance law to be applied to your estate. Seek professional advice to determine if this will be beneficial to your circumstances.
02 Succession Tax
Depending on which country you are domiciled in, the laws around succession tax, and how much your heirs will have to pay, may vary greatly. In some cases, direct descendants and spouses may have to pay no tax, whereas in others, rates can be extremely high no matter the relation. Consulting with an expert is critical to ensure your loved ones don’t pay any more tax than necessary.
03 Distribution of Legacy
Proper estate planning can give you the power to distribute your assets precisely to whom you choose, at which time. You may wish to apply certain conditions, timings or limits to your estate. Delaying an inheritance to be given only when your heirs reach a certain age, or allocating funds towards a particular cause, for example.
Estate Planning for Expats
Even if you have not previously considered estate planning, or even writing your will, it should be a priority once you move abroad, to protect you and your loved ones from any unwelcome surprises from local succession laws.
When creating a plan as an expat, there will be additional factors to consider, such as:
Tax efficient financial structures, such as trust accounts in the names of your heirs.
Consider gifting assets to your heirs whilst you are still alive to minimise inheritance tax.
Appointing an executor of your estate.
Arranging and paying for your funeral in advance.
Working with a power of attorney to manage your assets.
Appointing guardians for dependants in the event of your passing.
Trusts And Estate Planning
When it comes to reducing inheritance tax, trusts can be a beneficial tool to reduce inheritance tax.
A trust is usually a legal arrangement in which an appointed trustee will hold assets for a beneficiary. These assets will then cease to be classes as part of an estate, and therefore not subject to the same inheritance tax of that estate.
The ‘trustee’ may be an individual or a company, and the ‘beneficiaries’ may be one or more individuals. A trust can be set up to eventually pass the assets to the beneficiaries, or to hold the assets indefinitely to provide either a residence or an income to the beneficiaries.
Our advisers can help you establish which type of trust may be suitable for your financial plans.
Estate Planning Solutions
The Wealth Genesis can help get your estate in order, so you can be confident knowing that when the time comes, your legacy will be distributed as you intended, and your loved ones don’t pay more than they should.
