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  • Writer's pictureAlexander Beard

3 key reasons to update your estate plan as an expat

Your estate plan is your opportunity to secure your legacy, protect your loved ones, and ensure your assets are managed and distributed according to your wishes when you are gone.

It is a key component of financial planning, and like the other components, it can be a good idea to keep your estate plan up to date as you go through changes in your life.

Moving abroad or purchasing valuable assets in another country is one such change that might cause you to revisit your estate plan and update your will. Indeed, it is important to do so as every country has different rules around inheritance, intestacy, property, and tax.

Read on to find out three key reasons to update your estate plan as an expat.

1. To control the distribution of your assets and avoid succession or heirship rule clashes

If you own assets abroad, it is possible that some of them will fall under the local laws regarding their distribution. This is especially likely to be the case if you die intestate – without a will.

For example, in many countries, including France, Italy, Germany, and Spain, there is a system of forced heirship. If you own assets such as property in a country with forced heirship, some or all of those assets pass directly to your protected heirs – though what constitutes a protected heir differs between countries.

Japan and the United Arab Emirates are other countries with significant expatriate communities and strict inheritance laws that could clash with a foreign will.

This can mean that, if you have a will, the local rules may be followed regardless of its details unless you specifically write a will to counter those rules.

To overcome such rules, you may need to appoint a local lawyer or consult an international legal expert to ensure your assets are distributed according to a foreign will.

Updating your estate plan can help to make sure your wishes are met. It is an opportunity to ensure your will accounts for the local inheritance rules and to specify any rules you want to counter.

2. To ensure you don’t pay too much Inheritance Tax

If you have permanently moved abroad, even though you may no longer be a UK resident, you may still be “UK domiciled” for Inheritance Tax (IHT) purposes. While your tax residency status might be fairly straightforward, your domicile status can be quite complicated.

The UK usually levies IHT on the worldwide estate of individuals domiciled in the UK at the time of their death.

Your estate may face double IHT if you own assets in a country with which the UK does not have a double taxation agreement. However, there are often reliefs that your beneficiaries can claim to avoid this.

You may be able to mitigate IHT as an expat by familiarising yourself with the UK and local laws where your assets are held, and then updating your estate plan accordingly.

Your updates could entail:

  • Rewriting your will to ensure you make the most of your nil-rate bands

  • Giving gifts to your beneficiaries, including substantial assets, to save them from paying IHT on these assets later

  • Investing in IHT-efficient assets

  • Establishing a trust to move assets into a chosen beneficiary’s name and out of your estate.

Speaking to an international financial planner before making such changes to your plan can be invaluable. They can help to ensure your estate is tax-efficient and compliant with both foreign and domestic IHT rules.

3. To ease the process for your beneficiaries

The inheritance process of an internationally held estate can be complicated.

Your executors may need to obtain probate in the country where your investments or assets are held, and as you have read, complex tax or succession rules can emerge along the way.

This process could take months or even years to complete, particularly if you have not ironed out the details beforehand.

Revisiting your estate plan and rewriting your will offers you the opportunity to clearly outline your intentions. This will hopefully make it easier for your executors and beneficiaries to follow your wishes and for the lawyers involved to process the financial paperwork.

Updating your estate plan and rewriting your will with an international financial planner can help to ensure your executors avoid any unnecessary difficulty as they navigate different legal systems. It can also give you peace of mind knowing that your assets will be distributed according to your wishes in both your home country and your country of residence.

Get in touch

Keeping your estate plan up to date can help minimise potential conflicts and tax liabilities. It could ensure that your legacy is protected and your finances continue to support your beneficiaries after you’re gone.

To speak to a financial planner with international expertise, get in touch.

Email or call us at +44 (0)151 346 5460.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.


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