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Sun, Sea, and Succession: Protecting Your Assets Overseas
16 July, 2024 4 minutes reading time
The allure of overseas property and investments is undeniable. Many people expand their financial horizons beyond national borders, whether it’s a charming villa in Tuscany, a beachfront condo in Florida, or a portfolio of international investments. However, this global outlook also necessitates an international approach to estate planning.
Why Your Overseas Assets Need Special Attention
Owning assets overseas introduces a layer of complexity to your estate. Different countries have distinct laws governing inheritance, property ownership, and taxation. You must account for these nuances to avoid significant problems when administering your estate after you’re gone.
Potential Pitfalls of Ignoring International Estate Planning
- Conflicting Wills. Some countries demand a separate Will specifically for assets located within their borders. A Will valid in the UK might not be recognised or may conflict with local laws, leading to disputes and delays.
- Forced Heirship Rules: In some countries, particularly in Europe, laws mandate that a portion of your estate be allocated to specific family members, usually children or spouses, regardless of your stated wishes in your Will. These regulations can disrupt your intended distribution and create tension among beneficiaries.
A recent example is the UK High Court case of Del Curto v Del Curto. The outcome underscores the complexity of cross-border estates and the potential for family conflict when assets are held in countries with forced heirship rules. In this case, the deceased, a wealthy Italian businessman, Davide Del Curto, was not a UK resident. Legal proceedings took place in Chile and Italy. Still, the High Court in London upheld an Italian tribunal’s judgment awarding Mr Del Curto’s illegitimate daughter, Rita, £11 million, despite his Will not providing for her. This case is a stark reminder of the importance of understanding and planning for forced heirship rules when you have assets abroad.
- Probate Hurdles. Navigating probate in multiple countries can be a logistical nightmare. Each jurisdiction may have its procedures, timelines, and costs, resulting in significant delays and financial burdens for your heirs.
- Cross-Border Confusion. When assets are scattered across the globe, determining which country’s law applies to each asset can be a complex legal puzzle. This uncertainty can fuel disagreements and prolong the settlement of your estate.
- Tax Complications. Inheritance and estate taxes vary widely between countries. With careful planning, your beneficiaries could avoid unexpected tax bills, potentially diminishing the value of their inheritance.
Crafting a Strategy for Global Asset Protection
Proactive planning is critical. You can spare your loved ones unnecessary hardships by developing a strategy to manage all your assets, including those overseas.
Essential Steps
- Seek Specialised Legal Advice. Engaging legal professionals experienced in international estate planning is essential. They can guide you through the intricacies of various legal systems, identify potential pitfalls, and create a tailored plan that complies with relevant and current international regulations.
- Consider Multiple Wills. In some cases, having separate Wills for different jurisdictions might be the most effective approach. This approach can streamline the probate process and avoid conflicts between legal systems.
- Explore Ownership Structures. How you hold your assets can significantly impact your loved one’s inheritance. Depending on your specific circumstances, joint ownership, trusts, or other legal structures offer flexibility and tax advantages. Discuss these options with both legal and financial professionals for comprehensive advice.
- Understand Probate Procedures. Familiarise yourself with the probate requirements in each relevant country. Establish who can act as executors, what documents are needed, and any potential deadlines or fees. For example, in the UK, an executor is usually named in the Will and is responsible for managing the deceased’s estate. The probate process in the US can vary significantly from state to state.
- Anticipate Tax Liabilities. Work with your lawyer and a financial advisor to assess potential tax liabilities in each country. They will help you to develop strategies to minimise taxes and maximise the value of your estate for your beneficiaries.
Our Advice
International estate planning may seem daunting. However, with expert guidance, it’s manageable. By addressing the complexities head-on, you can enjoy peace of mind knowing that your overseas investments are protected and your wishes will be honoured, no matter where your assets may be.
Remember, succession law and tax regimes overseas differ significantly from the rules here. What you might think are apparent solutions (such as transferring a property to a child/children) can have unintended consequences. Sometimes, tax liabilities increase. So, professional advice and planning are essential to ensure your estate goes to the right hands at the right time.
Our specialist estate planning team has years of experience dealing with complex, cross-border estates. Please contact us if you would like to discuss this or any aspect of your Will or estate planning. We are here to help.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.