Own property Abroad? One Will may not be enough to protect your estate
Getting your Will organised, if you haven’t already, should be your number one priority to ensure your loved ones are protected. However, if you own property overseas, having just one Will may not be enough.
As tax and inheritance laws vary by country, you could get caught out if you own foreign property, leaving your estate vulnerable to not being passed on as intended or hit with unexpected taxes.
Here are the most important issues to consider and how an appropriate estate plan can prevent this.
If you are not aware of the laws around heirs in the country you own property, not having a Will could mean that your intended beneficiaries aren’t able to inherit.
In some countries, including the UK, you are free to choose whomever you want to inherit your property. In other countries, like Spain and France, for example, property passes to pre-defined heirs.
If a British national owns a Spanish property and passes away without having a Will, the property would pass down according to Spanish law. However, by having proper Will arrangements in place that covers foreign assets, he would be able to impose British law on his Spanish property, and pass it to whomever he pleases.
When you pass away, your property must pass through the probate process in the jurisdiction it is located.
If you only have one Will covering assets in multiple countries, you can significantly delay the probate process by months or even years, because the one Will will have to go through probate in one country at a time.
The order the Will would pass through probate in the relevant countries may vary. It would usually start in your country of origin, then your country of residence (if not the same as your country of origin). Any other country where you have significant assets will follow in turn.
Assets in countries that have already been processed may still be frozen until the last country has been processed, to provide security against any potential liabilities you may have in other countries.
As an example of how it can all go wrong: –
A gentleman passed away with one Will covering assets in 7 countries – the whole probate process took 23 years. By the time the estate was settled, most of his beneficiaries had already passed away themselves. Not that that made a difference. After solicitors in 7 countries had taken their share for sorting out the mess, there wasn’t much left to inherit anyway.
In general, real estate is governed by the laws of the country in which it is situated. A Will that is written based on the laws of one country and which has to cover real estate in another country, may at best face delays due to differences in law, or the Will may even be invalid.
By organising a Will for each jurisdiction in which you hold assets, you can ensure the Wills will reflect the laws in the relevant countries accurately and that your Wills can go through the probate process in each country simultaneously. This way, you can ensure your assets are passed on to your beneficiaries as quickly and smoothly as possible.
Inheritance and estate tax laws in your home country may vary from those of the country in which you own property. It can have a significant impact on the inheritance left for your beneficiaries if an estate tax is imposed, whether only on property owned in one country or on your entire worldwide estate. You should always seek in-depth tax advice when planning your estate and setting up your Wills.
Draft the wills at the same time
The benefits of organising Wills for each jurisdiction in which you own property or significant financial assets are clear. It is also wise to draft and update your Wills at the same time and with the same Will writer – making sure that you choose a Will writer with expertise in multi-jurisdictional estate planning so that local laws are taken into consideration. This way there is little risk of inconsistencies between the Wills, or of the Wills accidentally invalidating one another.
The small added cost of getting multiple Wills organised with the same Will writer is far less than the potential costs of getting your estate plan wrong.
With real estate being many people’s most significant assets, it is particularly important to plan ahead, especially when the property is owned abroad. With proper planning, you can avoid nasty surprises and ensure that your estate is passed on as you intend and as pain-free as possible.
Phoenix Wills specialises in writing multi-jurisdictional Wills for people with global assets. Contact us today for peace of mind that everything is in place.