Expat Wills - How to create a legally binding Will as an expat

Wills for Expats are a difficult subject to write about because they are a difficult thing to define.  Laws which govern an expat’s estate will be different depending on their home nation and on the laws of the country in which they currently reside.

This article concentrates on English and Welsh (E&W) and other British domiciles, however, much of what is included here will be relevant for those of other nationalities and domicile statuses.

For English and Welsh domiciled expats, the law that governs the devolution of their movable estate (e.g. cash or personal items), is the law of England and Wales. However, this may not – and, in fact, is unlikely to extend to the immovable estate (e.g. land and buildings) held anywhere other than England and Wales).  The immovable estate is more likely to be dealt with under the law of the jurisdiction where the asset is situated.

As each nation has their own laws to govern the distribution of and the taxation on an estate, no one-size-fits-all Will exists, so, expats who own assets in more than one jurisdiction may find they require several Wills. 

Expat Wills example 1 (Joe):

Joe, who is Welsh domiciled, lives in Brazil.  He has a house in Brazil and a flat in England. He also has a bank account in Brazil, one in France (where his mother now lives), and one in England.

Joe would need an E&W Will to deal with his personal belongings and his cash in all bank accounts wherever situated; this E&W Will can also name the beneficiaries of his flat in England.

For the house in Brazil, Joe would need a Brazilian Will as the laws of Brazil would prevail for the immovable property (i.e. the house) that is situated there.

These different Wills need to work alongside each other and be written carefully so that a subsequent Will in a different jurisdiction for assets held there, doesn’t, inadvertently, revoke a Will already made somewhere else.

Taxation

Although the laws of the expat’s home nation will prevail only for the distribution of their moveable assets held worldwide and their immoveable assets held in the jurisdiction of the home nation, the taxation treatment may well be different. 

For example, for a person domiciled in E&W, inheritance tax will be due on all assets that are over the value of the nil rate band (currently £325k) wherever these assets are held.  Yet, there may also be tax due on the same assets in the country where the assets are situated.

If there is a double taxation treaty between the UK and the country concerned, this may mean that the tax isn’t paid to both the country where the asset is held and to the UK, however, a treaty is not always in place.

Expat Wills example 2

Let’s say the total value of cash in all Joe’s bank accounts was £220k, his property in England was valued at £625k and his Brazilian house was valued at £180k, equalling £1,025k.  If Joe were to die, his estate would be taxed in the UK at 40% on everything over £325k, thus, £700k x 40% = £280k.

However, that may not be the end of the tax due.  There may be tax due in Brazil for the house held there and tax due in France on the monies held in the French bank account. 

What happens without a Will?

If you don’t have a legally binding Will, the laws of intestacy will prevail.  In E&W, the intestacy rules will divide the estate of a deceased person in a standard way and this will not suit everyone.  For example, a long-term partner (i.e. one who was not married or in a civil partnership with the deceased), even if they have children together, will not inherit anything at all, step-children are not recognised under the intestacy rules, guardians and executors will be appointed by a court and there will be no provisions for smaller gifts, for example, charitable donations.

The intestacy rules in E&W can make for some very difficult circumstances between family members.

Each country will have its own rules to dictate what happens to an estate when a person dies, so, for those with immoveable property situated in a certain jurisdiction it is the rules of that jurisdiction which will prevail.

And this may have consequences for the taxation of the estate.

Expat wills example 3

If Joe dies without a Will, his property in England and his worldwide moveable assets (i.e. the cash he has in bank accounts) would be subject to the intestacy rules of E&W; his property in Brazil would be subject to the Brazilian rules of intestacy.

For taxation purposes, as Joe is single, not very much would change.

A Expat wills example 4 (Joanna)

Joanna is in the same position as Joe however is married with one child of her own and one step-child.

Her circumstances would mean that her property in England and her worldwide moveable assets would be split between her husband and her own child with her husband receiving the first £250k of her estate and both her husband and child receiving half each of the remainder.

Her house in Brazil would be divided as per the Brazilian law and, as this would also include her child inheriting, there would undoubtedly be an, otherwise avoidable, inheritance tax issue in the UK as, in the UK, a spouse is an exempt beneficiary for taxation purposes but a child is not. In the case of Joanna’s estate, her child would now be inheriting an amount over the Nil Rate Band – thus, inheritance tax will be due.

Apart for the tax bill, the wider question, of course, is; how would the devolution of Joanna’s estate affect the family dynamics? Possibly, this would be unfavourable.

Guardians

For those expats with children, one of the main concerns is what will happen to my children should I perish?  For most jurisdictions, this can be done by naming Guardians to look after the children with the same role and responsibilities as the parent.

Some jurisdictions around the world will allow for the Will in an individual’s home nation to prevail, especially in the naming Guardians, however, this is not always the case, so cannot, and should not, be relied upon.

This may mean that having a Will written in the country of residence is the answer.  That said, it is often best to discover if the jurisdiction does allow the Will of the home nation for Guardianship purposes, as this may give a better choice of naming guardians than would the laws on guardianship in country of residence, which may not allow for the Guardians of choice.

When choosing the option of having a Will written in the country of residence, although this may suffice for the naming of Guardians, a point to remember is that this Will is unlikely to be accepted for the devolution of property – especially immoveable property – held in the home nation or elsewhere.

Wills and The European Union (EU)

Expats who hold property in an EU Member State (except UK, Denmark or Ireland), may find the laws governing the devolution of that property are not those of the country where the asset is situated.

This is because the EU Succession Regulation which came into force on 17^th August 2015, provides that the succession law which applies to a person’s entire estate is decided by that person’s last place of habitual residence.  For expats, however, the regulation gives a superseding right to choose the law of their nationality.

Much discussion has surrounded the EU Succession Regulation and to what it might mean.  For example, does having not decided upon a law to govern a property situated in one of the Member States involved mean that the automatic choice is the law of the country where the person was last habitually resident; no matter where that was?

If this is the case then, those who reside in countries of forced heirship may find their properties being divided in ways which they would most certainly not wish.

Expat wills example 5

Joe has now married the daughter of his mother’s friend and, because she lives in France, has sold his English property and has bought a house in Nice.

At the same time, his firm has asked if he would like to go to work on a project in Qatar.  Seduced by the warmer climes, Joe and his wife go to live in Doha for the next five years.

If Joe does not write a Will and perishes whilst still a resident in Qatar, it might be that his property in France (a Member State which has signed up to the EU Succession Regulation) is divided up on his death as per French law which dictates that the law of the country of habitual residence shall prevail.  Joe’s country of habitual residence is Qatar and, therefore, this could mean that Qatari Sharia law will decide upon the devolution of Joe’s French home.

As yet, no clear outcome is known as the regulation is only in the early stages, however, writing a Will which gives the option of using the law of the individual’s nationality must surely be the more certain and more definitive solution.

Getting the Right Advice

This article has only covered some of the main issues that affect an expat; there are, of course, many more.

What would happen if they die, although not necessarily something that a person wants to think about, is more in the front of mind when that person lives abroad where the laws and customs are unfamiliar.

With so many factors to consider when creating a Will as an expat, it is vital to seek expert advice from someone who will be able to help structure the devolution of the estate to ensure the right people inherit and inheritance tax is minimised.

Every situation is different.  Every family circumstance is unique. Every person has distinctive needs and wants special to their own situations. And every country has their own regulations and practices. The best way for an expat to ensure their family and wealth is protected is to seek the right advice.

And to make sure they have a Will in place that protects them - just in case.

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