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Navigating the complexities of ‘worldwide’ wills and foreign assets

Posted: 26/09/2018

In today’s global society an increasing number of people are acquiring assets abroad. Multiple reasons exist for this ranging from working in a foreign country and opening a bank account abroad, to buying a holiday home in Europe, or marrying a foreign national with assets in another country which then become shared.

The ownership of foreign assets can cause complex issues for executors when dealing with the administration of an estate. Overseas assets are often not discovered until after death, leaving executors with challenging administrative problems. The apparently simple task of closing an overseas bank account after death can, for example, give rise to significant delays and unnecessary administrative costs in multiple jurisdictions. Such problems could have been avoided, if proper planning had been put in place. This article discusses such planning and its importance to ensuring the successful administration of an estate.

English domiciled individuals with overseas assets

An individual’s permanent home or ‘domicile’ can affect succession to assets under English law. Individuals domiciled in England should be aware that, at the time of their death, an English will applies to their assets such as bank accounts and investments (their moveable assets) both in England and abroad. It will also apply to their property such as real estate/land/buildings (their immoveable assets) in England.  Under English rules, however, succession to a person’s immoveable property is governed by the law of the country where it is located.

An English will may be drafted so that it applies to ‘worldwide assets’ including real estate/property and moveable assets abroad, but a foreign jurisdiction may not recognise the legal validity of an English will. This is particularly common if it includes a trust.

If a foreign jurisdiction fails to recognise the English will, property, such as a holiday home, could fall under local forced heirship succession rules which determine the shares of an asset different family members receive. Under these rules, it is possible that specific family members might receive significantly less than the deceased would have wished. This could potentially lead to financial hardship and cause conflict between those left behind. Even if the English will is legally recognised abroad, specific foreign financial institutions may not accept it and may require stringent additional evidence from executors before they release assets. The requirements for dealing with the administration of assets in every foreign country will of course vary according to the laws of their jurisdiction.

In some cases forced heirship rules may be avoided through use of the European Succession Regulation (Brussels IV), in an English will. It was introduced to unify succession rules across Europe and its provisions will continue to affect the UK even after Brexit. An election within a will may be necessary to incorporate specific provisions and consideration should be given as to the date from which they apply.

Non-domiciled individuals with assets in the UK

For non-domiciled individuals with assets in England, those who administer their assets must comply with the laws of England. These require either an English grant of probate or a resealed foreign grant which provide executors with the authority to administer and ultimately distribute assets to beneficiaries of an estate. The process will depend on the jurisdiction of any foreign grant which has been obtained and whether the foreign will is admissible for probate in England.

If the deceased died intestate, or their will is not admissible for proof, the evidence required is more strenuous. It may be necessary to obtain affidavits of evidence regarding domicile, facts and validity of a will together with a foreign decree of grant before assets located in England can be dealt with. This can be very time consuming and costly to the estate, ultimately reducing funds available for its beneficiaries, who will often include family members.

Planning opportunities

Failure to put in place adequate planning where assets are owned aboard (whether residing in the UK or overseas with assets in this country) can create considerable practical and emotional challenges for those charged with administering the estate.

UK domiciled individuals who own assets abroad should take expert legal advice within the relevant jurisdiction as soon as the asset is acquired. A separate will may be needed for the specific asset to ease the administration of the estate (as well as for succession and tax planning purposes).

For non-domiciled individuals with assets in England, a will should be put in place in accordance with English law. This must be done with care to ensure that an existing foreign will is not revoked.  It is therefore prudent for lawyers in separate jurisdictions to liaise with each other to ensure all assets are appropriately covered in accordance with the law of the relevant countries.

It is important to consider putting in place more than one will. Individuals who do not do this risk leaving their family members and executors facing complicated probate rules and regulations to contend with in foreign countries, expensive procedures and long delays in accessing funds. In worst case scenarios, they may create family disputes when unforeseen foreign legislation results in unintended divisions of assets amongst family members.

The location of executors appointed under a will can also have a significant practical impact on the administration of an estate. In some scenarios the appointment of a professional executor in a foreign country may be sensible, as it can eliminate problems with international time differences when dealing with a multi-jurisdictional estate. It can also reduce difficulties with the signing of the documents required during the administration process.  

The choice of guardians appointed under a will is also extremely important for families who are located across multiple jurisdictions, to ensure clarity and avoid any potential disputes. In particular where grandparents and other family members are located in different countries, there can often be a marked difference of opinion in relation to the best interests of orphaned children.

The legal implications associated with the ownership of overseas assets are broad and complex. It is also important to ensure legal advice is taken in relation to lifetime ownership, and the concurrent tax and domicile issues which must of course be considered in addition to putting in place watertight estate planning.

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Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP