Inheritance planning is about ensuring you leave the legacy you want to.
Thinking about inheritance well in advance could help ensure that you pass on everything you want to those who matter most to you.
Succession planning can be complicated at the best of times, and all the more so for expats who are likely to have financial assets in different countries. However, being aware of the common themes of inheritance laws around the world at the legacy planning stage could help to simplify the process.
Your domicile is important when determining your tax liabilities, as well as how your estate will be passed on after your death. It is normally acquired but this is not always straight forward to determine.
While domicile is a significant factor, you may have a liability to inheritance tax in any of the countries where you have assets or connections, depending on local laws.
Local versus international
Inheritance laws and probate vary from country to country and can present issues for expats unless the appropriate consideration is given and action taken. You may want to consider obtaining expert tax and legal advice from international experts for a holistic view. Although you may still need to use local firms to draw up any specific legal documents for that country.
The Napoleonic Code in France regulates inheritance, including compulsory provisions to prevent children being disinherited. In effect, this can make it very difficult to leave an estate solely to a surviving spouse, potentially causing complications for a French domicile retiring elsewhere.
Tax rates vary considerably between countries; although Double Taxation Treaties may save you from paying tax in both your country of residence and that of domicile.
The importance of a will
The first step to ensuring your assets are transferred according to your wishes is to draw up a will - although you may require more than one. Tasoula Crosby, Solicitor at Gorvins Solicitors advises. "This can be a complicated area, and the precise legal position will depend on the country in question. However, on death, assets are usually dealt with under the law of the country in which they are located"
"It is therefore advisable to make a will in every jurisdiction where you hold assets. It is important to ensure that each will specifically states that it applies only to assets located in that country, to avoid situations where one will inadvertently revokes the other."
As with other areas of financial planning, it's important to start considering inheritance early to understand the implications it will have for your assets. As such, thinking about your legacy should be part of your overall wealth planning. Expat life can present additional challenges in managing your legacy but looking ahead and taking into account location and personal circumstances can help to ensure you leave the legacy you want.
The value of investments (and any income from them) can fall as well as rise and you may not get back what you invested. For some investments, this can also happen as a result of exchange rate fluctuations as shares and funds may have exposure to overseas markets. Investing should be seen as a medium to long-term proposition of at least five years.
The value of tax treatment will depend on your individual circumstances and may be subject to change in the future. Tax rules differ from country to country. If you're unsure about your tax commitments, you should get professional advice. It's your responsibility to disclose your income to the tax authorities.
Interview with Tasoula Crosby, Solicitor at Gorvins Solicitors (June 2015).