This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, it is subject to change and we are not responsible for any errors or omissions.
A will is important for UK residents, yet for expats it is even more so. With interests and assets based across different countries, it is vital that your loved ones are protected in the event of your death.
For Spain-based expats, the last thing you want is for grieving family members to be confused about what your wishes were – and, how the rules apply about inheritance tax (IHT) in Spain and the UK.
Fortunately, it is possible to prepare your estate to minimise future stress for your surviving loved ones. Below, our Murcia financial advisers offer five key elements to an expat will. We hope these insights are helpful to you.
If you want to discuss your financial plan with a member of our team in Murcia, please get in touch to arrange a no-obligation financial consultation, at our expense:
+34 966 460 407
info@scottsdale.eu
#1 Update to reflect your status
For an expat, your location – i.e. where you are “resident” and “domiciled” – will have a significant impact on how your estate is administered and taxed after death.
Under UK law, for instance, an individual’s worldwide estate is subject to UK inheritance tax (IHT) when they die. In 2023-24, up to £325,000 is free of IHT under the “nil rate band”. Once the estate value exceeds this threshold, a standard 40% tax rate applies.
This means that if you own a property in another country and you are deemed “UK resident and domiciled” when you die, then this property may be subject to IHT in the UK. There may be exceptions if the UK has a “double taxation agreement” with the other country where the property is located, which allows tax in one country to offset tax in the other.
Consider including your residency and domicile status in your will. Update it if your status changes and seek professional advice to ensure your estate plan is still protected.
#2 Check your executors
In the UK, a will needs the signatures of two witnesses who are “in sound mind” and over the age of 18. In other countries, the rules may be different about what constitutes a legally valid will. As an expat, make sure you seek professional advice about the local rules.
Your executors are also important. These are the people who will implement your will when you die. In the UK, you can have up to four. Again, other jurisdictions may have different rules (e.g. concerning your relationship to the executor(s)).
Consider naming people that you trust as your executors in your will. Naturally, you should seek their permission first and make sure they understand what the role entails.
As an expat, your estate may be especially complex due to assets located overseas. So, make sure your executors are up to the task of potentially working with foreign authorities, rules, customs and languages!
#3 Do not hide assets
As an expat, you may have various offshore investments and it can be tempting to assume that these are not relevant to your IHT liability. However, this assumption is often wrong – with significant penalties imposed in many cases if you are discovered.
Your will is the ideal place to list your international property, possessions, pensions and other assets (e.g. investment accounts). After all, you do not want your loved ones to miss out, either.
#4 Coordinate different wills
For some expats, it will not be sufficient to have a single will. Rather, multiple wills may be required to ensure that your entire worldwide estate is handled correctly.
If so, take care that your wills do not conflict with each other. If you need to update your UK will, for instance, then make sure any changes are accounted for in any other wills you have.
#5 Consider power of attorney
This is not strictly a part of your will. However, it can be a valuable component of a wider estate plan. In the UK, power of attorney is a separate legal document which stipulates which person(s) can make decisions about your estate on your behalf – if you become unable, or unwilling, to make these decisions anymore.
Your executor(s) and appointed representative(s) for power of attorney do not need to be the same people. In a similar theme, if you have dependents – such as young children living with you abroad – consider also naming guardians into your will, in case anything happens to you and your partner (or spouse).
Invitation
Estate planning is complex enough for a UK resident. Being an expat certainly adds additional complications! Yet, with professional advice, it is possible to surmount the challenges and construct a robust will (or wills and power of attorney) which safeguard your goals for your estate – also protecting your loved ones in the future..
If you are interested in discussing your own financial plan or inheritance tax strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:
+34 966 460 407
info@scottsdale.eu