WHEN SHOULD YOU START PLANNING WHAT HAPPENS TO YOUR ESTATE?
Simply put, as soon as possible. Whilst talking about what will happen to your estate when you die can be a difficult conversation to have, it’s essential that you have a plan in place if you have significant assets and certainly before you reach later life.
Avoiding addressing the issue, could cause your wealth to suffer greater problems as a result of probate or tax charges. To ensure that your wealth passes on according to your wishes, you do need to plan ahead.
WHAT’S INCLUDED IN AN EXPAT ESTATE PLAN?
While some of the elements of an expat estate plan are similar to a standard UK plan, there are key variations. These take into consideration the laws and financial structures of the country of your residence, as well as local customs.
Typically, an expat estate plan will include the following:
- A will in every jurisdiction in which you hold property assets, which also takes into account your domicile circumstances
- Your selected power of attorney and executor
- Tax minimisation strategies including trust accounts
- Ensuring beneficiaries are up-to-date on all financial plans, should you ask us to share the information
- Any funeral arrangements
Setting up an expat estate plan is an important step and shouldn’t be tackled alone. This is where we can help.
TRUSTS AND ESTATE PLANNING FOR EXPATS
One option to consider, which could save a significant Inheritance Tax bill, is to set up a trust or use something called IHT privileged investments.
Trusts are essentially ‘family money boxes that you can put your assets into and lock, until those who hold the keys open the box to gain access to your assets.
In this situation, you are referred to as the Settlor. As the Settlor, you can place some of your assets into a trust fund and list your chosen beneficiaries, who can access these assets from a pre-defined date or event in your estate plan.
As a foreign domiciled Settlor, you aren’t excluded from the list of beneficiaries, meaning that you too can access assets from the trust fund if you want to. If you are UK domiciled, careful planning can leave you with either a pre-determined income stream, or access to a portion of the trust assets at regular intervals.
However, you should be aware that where you are not excluded from benefit under the Trust you could find yourself exposed to the same levels of Inheritance Tax as if your wealth was not protected by a trust fund.
UK RESIDENCY VS. DOMICILE
It’s important to define the major differences between residency and domicile.
Your residency is typically defined as the place where you live, and the UK authorities are mainly concerned as to whether you are UK resident or not. Normally domicile flows from your father’s homeland at the date of your birth, his decisions and actions during your minority and your decisions and actions once you come of age. You can take action to change your domicile when you move countries, although this can be complicated.
Your domicile is important as it drives the decisions about how Inheritance Tax will be applied to your estate as well as other financial and legal obligations associated with your domicile country. If you are an expat, HMRC will focus on your domicile rather than where you actually live for Inheritance Tax purposes.
ADVICE ABOUT EXPAT ESTATES
From an initial conversation to complete analysis and planning, our team of experienced specialists will help you work through the challenging tasks that need to be considered if you are an expat and are planning the future of your estate.
We will review your personal circumstances and help you create a comprehensive, detailed plan to ensure that the assets that you have accumulated through your life are protected, and will be passed onto your loved ones when the time comes.