Expatriate Wills - How To Plan
Should you have a Will when you are an expatriate & in which country should it be?
No matter what your age, having a legally binding expatriate Will in your country of residence is vital if you want your final estate to be distributed as per your wishes – instead of the local law – when you die. In the UK it is estimated than two out of every three individuals do not prepare a Will until much later in life. However, it is never too early to prepare a Will as an expat. Expats who own assets in multiple countries are likely to be subject to the probate and inheritance laws of that country. Added to this, your executor may have to be granted the authority by the local jurisdiction while your UK Will may not also be accepted in that jurisdiction.
What is an expatriate Will?
Strictly speaking there is no such thing as an expat Will as each jurisdiction has their own laws governing how an estate is calculated and distributed after death. Therefore, it is currently advisable for expats to have a Will created in each jurisdiction, created with a local solicitor who has a full understanding of the laws in that country.
What is intestate and what happens if I don’t have a valid Will in my country of residence?
Unfortunately, there is no pleasant answer to this. If you don’t have a legally binding Will in your country of residence, your entire estate is liable to the law of that state. These laws are called the rules of intestacy, and if you die without making a will you are deemed as an intestate person. Dying intestate means that decisions about everything including property, finances, dependents and taxes calculated will be made by the state you live in. In almost all cases the UK government will be powerless to change any decisions made.
For example, under intestate in the UK, only married or civil partners and some close relatives can inherit from the estate of a deceased person without a Will. In some countries, such as Spain, if you own foreign property but no longer reside in that country and you don’t have a valid Will in any jurisdiction, the property will be subject to that country’s intestate rules.
Do I need a solicitor to create an expatriate Will?
Many countries have companies who now will offer the opportunity to use an online service to create an expat Will for you. The costs of creating an online Will are significantly lower than using solicitors, however, if the strict witness rules are not followed or the online forms are not completed correctly, the will may be invalid and leave your beneficiaries at risk. The Guardian newspaper recently estimated that an ineffective Will could absorb as much as 10% of the total value of the estate in additional fees. Quite often it is only when the Will is needed that these errors become apparent – and resolving the issues could take months, or even years. The potential pitfalls that come from creating a Will online which can be avoided by employing the service of a solicitor. Most solicitors will also offer a Will review service to ensure that it stays relevant as you get older.
How to prepare to make an expat Will?
While it is possible to create a Will online, for expats it is fully recommended to seek advice – not just in the UK but also from a solicitor in your country of residence. Seeking advice from solicitors can be expensive, therefore it is a prudent idea to ensure you are fully prepared to keep costs to a minimum. To help, you can begin your preparation by following these steps which you will need to consider when drafting a Will.
Identification of the people involved
As a first step you need to consider three different types of people: dependents, beneficiaries and executors. Your dependents are the people who rely on you for financially or for care. Typically, these are likely to be children or in some cases elderly relatives, but can also include people with disabilities. Be clear and write down who your dependents are and how they are dependent on you, keeping in mind that if they live in a different country, they may be impacted by local laws and taxes. The beneficiaries are the people who will receive your estate and will often comprise of partners, children, siblings and charities. Be clear about who you want to receive your estate and in what proportions as failure to do so could mean it is split equally. Finally, you need to pick your executors, i.e. the people who will be legally responsible for administering your estate and carrying out your wishes. They may also be required care for any dependents as well as manage the finances of other beneficiaries if they are unable to do so.
Identification of your estate
The second step is to identify what is included in your estate. This may seem obvious; however, it is important not to underestimate the size of this task. Depending on your circumstances it is not as important to understand the amounts of each account, property or policy rather than the fact that you actually own them. Make a list of everything, including any debts or liabilities, to ensure that nothing is missed before assessing the proportions you wish to distribute and to whom. With the advent of the digital age, it is also now important to consider your digital profile when considering your estate. While many digital assets may not be worth any financial value, it is important that you decide how you wish them to be managed if and when you die. Be sure to include any websites, social media profiles or online accounts you may have.
Decide what you want to happen when you die
At this stage you need to establish what you want to happen when you die. This includes who you want to look after any dependents (remember to ask them and your dependents first) and the financial provisions which may also be required. Your solicitor will be able to assist you in more depth, but it is relatively simple to organise, providing you have had the correct conversations in advance.
Dividing up your estate
If you anticipate having money to leave in your estate, your final step is to decide who gets what. Your first consideration must be any debtors or liabilities as your estate will pay these before the remainder gets distributed. Also ensure that you only include assets which are legally yours to give. If you have received anything as a gift, double check to ensure that you actually own it, otherwise it will not be included in your estate. When considering how to divide things up, it is important to remove as much emotion from your decisions as possible. Try to look beyond any petty feuds or short term issues to consider longer term implications. Remember that your legacy will leave a lasting legacy on those you leave behind, and your decisions here could have an impact on relationships after you are gone. If you are including particular possessions in your Will, consider the importance of each item before leaving it to someone. If you are unsure, never be afraid to ask.
Inheritance tax payments
If you are UK domiciled, you will be subject to UK inheritance tax laws on your entire estate, regardless of your country of residence. In addition to this, you may also be subject to local inheritance tax rules which may mean that the tax man has to be paid before the estate will be released to be distributed.
Wills for expatriates in the European Union
Until recently, the rules for expats in the European Union were fairly complicated. However, a law was passed in August 2012 which provides expats living in the EU (except if you live in the UK or Denmark) two options with regards to their inheritance. This law comes into force on August 17 2015. The first option is where you get to choose which law applies in the event of your death. The simplest way for this to happen is to have it formally announced in your Will. The second option is for the law of your permanent country of residence to apply. Typically, this will mean the country where you have resided for the previous five years. If this is unclear, the country which you have the strongest association with throughout your life.
Storing your Will as an expatriate
Creating a Will is next to useless if it cannot be found when you die. If your Will cannot be found, you are deemed to be an intestate person. Therefore, it is important that you store your Will where it can be found and also accessed when required. Remember that you may also wish to review your Will at various stages in your life, for example if you divorce, have children or move country. Therefore, being able to store your Will in a secure location, but also have access it is important. Often your solicitor or accountant will be able to provide the service for you, while there are also storage companies which offer secure storage, instant access as well as digital versions for you as and when required. Using this kind of service is beneficial as it means that if you change location, you do not have to take your Will or other important documents with you, ensuring that they do not get lost.
Review your expatriate Will
A feature of expat life is that personal circumstances change on a relatively regular basis. This is in addition to the more regular life changes which happen to many people, including births deaths and marriages. Any major event in your life could require a subsequent change to your Will and it is recommended to review your Will after each major event to ensure your Will remains current. Similarly, if laws have changed, you may need to revise certain aspects of your Will to ensure it is still legally binding.
Get expert advice when creating your Will
With so many factors to consider when creating a Will as an expat, it’s vital you seek expert advice with someone who is familiar with local law in your country of residence – otherwise your estate may not reach your loved ones. They will also be able to give you advice on how you might be able to structure your affairs to minimise inheritance tax for your beneficiaries.