Estate planning: considering foreign assets and the ‘worldwide will’

It is becoming increasingly common for people to acquire assets in multiple countries. This could be as a result of relocating abroad for work, purchasing a holiday home, entering into a marriage or civil partnership with a foreign national whereby assets become shared, or deciding to move abroad for a different lifestyle. Whatever the reason, and whatever assets are accrued throughout a person’s life, it is important to ensure that all assets are properly accounted for and that people who own assets in multiple jurisdictions are aware of the possible issues that can occur with international assets when estate planning.

English habitually resident individuals with assets in other jurisdictions

If an individual is deemed to be habitually resident in England at the time of their death, English law will apply not only to any property they may have in England and Wales, but also to all moveable property, such as bank accounts and chattels, both in England and abroad. However, under English law immovable property is still governed by the law of the country where that property is located.

Some foreign jurisdictions, predominantly civil law jurisdictions, have forced heirship succession rules. These rules mean that an individual must leave a percentage of their estate to specific individuals rather than being able to leave their estate to whomever they wish, as is the case in English law. This clearly can cause problems when a person wishes to leave assets that could fall under forced heirship rules to beneficiaries that would not be entitled to benefit under these rules.

However, the EU Succession Regulations (Brussels IV) can sometimes assist in avoiding forced heirship if the regulations are written into an English will. The EU Succession Regulations came into effect in August 2015, and were designed to bind most EU states (the UK, Ireland and Denmark are excluded), allowing EU citizens to organise succession matters in advance and essentially elect the jurisdiction they would like their estate to be distributed under. Therefore, someone who is habitually resident in England, but has assets in an EU state bound by the regulations, such as Spain or France, can choose to use the regulations to elect English law to determine the succession of their property in that EU state.

Non-habitually resident individuals with assets in the UK

If a person is not habitually resident in England and Wales, but has assets in England and Wales, then those assets must be administered under English law. This means that whether or not there is a will written under English law covering those assets, either an English grant of probate or a resealed foreign grant will be required to enable executors to deal with the English assets in an estate.

The situation becomes even more complex when an individual not habitually resident dies with assets in England and either dies intestate (without a valid will) or the will they have is not admissible for proof, as further evidence will be required before a grant can be obtained and that aspects of the person’s estate can be administered.

Both of these eventualities are costly and time consuming and can be avoided by having an English will to cover at least the person’s assets in England and Wales.

Multiple wills or a ‘worldwide’ will?

The question then becomes whether it would be best to write multiple wills or a ‘worldwide’ will to cover an individual’s assets. As seen above, there are many issues that can arise from estate planning when the individual has assets in multiple jurisdictions. The question of multiple wills or a ‘worldwide’ will is entirely dependent on the individual’s situation, but there are pros and cons to both that need to be carefully considered in any instance.

Multiple wills have the benefit of being written by lawyers in both jurisdictions, therefore drawing on the expertise of the legal professional with regard to elements such as the effectiveness of the will and tax issues that may arise in each jurisdiction. Having wills drawn up in multiple jurisdictions also means that the process of putting the wills through probate can potentially commence simultaneously, and thus assisting to speed up the administration of the estate. However, multiple wills are more expensive, as the individual will have to pay for multiple documents to be drawn up. There is also the risk that a will signed later in one jurisdiction could unintentionally revoke a will previously signed in another jurisdiction, therefore leaving assets unaccounted for. It is important, therefore, to be vigilant in this situation, to ensure any revocation applies only to the jurisdiction in which the new will is being written.

A ‘worldwide’ will, on the other hand, is arguably a cheaper document to draft, as only one is required, and easier to keep track of as there is only one document to cover all assets. If amendments are required, then the one document is changed and will cover all assets, preventing unintentional revocation of a will. A single ‘worldwide’ will drawn up in England could also permit individuals to overcome the forced heirship rules that apply in some jurisdictions. However, if an estate is complex, and has assets in multiple jurisdictions, having a ‘worldwide’ will may not create the most tax efficient solution for the estate, and could result in executors having to contend with complicated probate rules and regulations whilst trying to administer the estate. There could also be additional delays in settling the estate, as usually a will has to go through probate in the jurisdiction it was written before the process can begin in another jurisdiction.

Regardless of the complexity of an individual’s estate, how to elect to leave property will vary from one person to the next, and similarly depends on the type of assets owned and where the assets are situated. There is no blanket approach to estate planning, especially where multiple jurisdictions are involved, and professional advice should be sought to ensure the individuals wishes are being carried out, all assets are accounted for and tax issues are considered.

If you have any questions regarding managing worldwide assets, or would like advice on estate planning and drafting your will, please get in touch with our Private Client department on 01252 471211 to discuss your queries further.