Probate Abroad – Dealing with foreign assets

Living abroad is becoming a popular option among British retirees. With the cost of living in the UK increasing, the opportunity to exchange rainy days for sea and sand is an attractive one. Making your money stretch further with lower property prices, cheap goods and all-year sunshine, it’s easy to see why many Brits are making the move. However, with the excitement of a more leisurely lifestyle, it’s easy to forget things like updating your Will or writing a Will to include dealing with foreign assets.

Does a UK Will cover foreign assets?

As standard Wills are not international. As the laws vary from country to country, a simple Will drafted in England and Wales may not be accepted or be able to appropriately accommodate what should happen to foreign assets. However, you do have some options available to you to make sure all of your assets are covered.

• Writing up separate Wills in each country where you have assets, the aim is to cover the estate held in England and Wales and the foreign estate.

• Creating a Will which will cover the distribution of their UK and foreign estates in both/all countries.

*It is crucial to remember that a will made in the UK may not be valid abroad. This will depend on the terms and complexity of the will. For straightforward cases, the UK will is likely to be accepted. In some more complicated situations where minor beneficiaries or trusts are present, you may need to make a will in the country of residence. This will simplify the process and make it cheaper but be aware that a new will made abroad may revoke your previous UK will.

Is a foreign will valid in the UK?

A will made abroad can be valid in the UK, or more accurately it can be upheld in the UK as long as the Will is executed in accordance with the Law of the country in which the deceased was primarily resident, domiciled or a national of at the time of death. You can apply for probate in the UK with a foreign Will but will most likely require additional documentation for the probate office to establish its validity.

Do foreign assets fall under English probate and inheritance tax laws?

Not necessarily, before administering the assets you will need to establish which countries laws the assets fall under. It can be difficult to determine this as each country will have its own approach. The first step is to establish where the deceased is domiciled. This can affect the tax liability and who is entitled to inherit the estate.

Property or assets are subject to the laws of the country in which they are held, and provisions need to be made to ensure your estate passes to your chosen beneficiaries. It is also highly likely that a UK Grant of representation also known as a grant of probate will not be valid in any other country, which means it can’t be used to probate foreign assets.

Both for cases of British ex-pats, as well as cases of “non-domiciled” foreign nationals living in the UK, administering an estate with overseas assets, will often require professional advice at the pre-planning stage and at the stage of administering and distributing the estate.

Is probate required for foreign assets?

You may require probate (or the equivalent) in the country where the assets are held even if you do not require probate in England and Wales. Alternatively, you may require probate in England and Wales for the assets held here but you may not require it in the country where the foreign assets are held.

You will need to seek advice from a professional in each country where the assets are held.

Are foreign assets subject to inheritance tax?

Moving abroad does not discharge any tax liability on property overseas under UK law unless you change your domicile of origin. Despite popular belief, changing residence does not automatically make you “non-UK domiciled”. The result of this can be double taxation, which may leave you or your loved ones at a serious disadvantage, having to pay both domestic and foreign taxes on foreign assets.

This is because a person’s liability to personal taxation in the UK is determined on the basis of their Residence and Domicile status, the place where their assets are held as well as the jurisdictional tax agreement between the two countries in question.

For example, a common misconception with British ex-pats is that their foreign assets are immediately exempt from UK tax when they move to a foreign country, which is incorrect. Equally, a UK resident is potentially liable to Income Tax and Capital Gains Tax on worldwide income/gains.

It is therefore very important for a person to seek financial advice, particularly where foreign assets include property, to help minimise any tax burdens as well as plan forward for the way they wish their estate to be passed on to their loved ones.

Can I apply for probate if I live abroad?

You can apply for probate in England and Wales from anywhere in the world. As probate can be applied for online through the government website. However, it is more difficult applying for probate from abroad, especially if the estate is large and complex. You will most likely need assistance from a professional in England and Wales to contact the institutions (if there is a significant time difference) and collect and send paperwork on your behalf (To avoid postage times and risk of loss).

It is highly advisable that you take professional advice before moving abroad and seek advice from a solicitor in the country you plan to move to. In the long run, this will save you and your family from great stress and considerable financial losses.

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