Top Tips When Dealing With Estates With Foreign Assets
It can be difficult to know where to start when it comes to dealing with the administration of foreign assets such as overseas property, bank accounts or shares.
Sara Janion, Director of Worldwide Lawyers – a UK-based company, which connects UK solicitors and legal practitioners to independent lawyers across the world – and Notary Public of England and Wales, shares her top tips in how to best handle an estate where there are foreign assets!
Don’t leave the foreign assets until the last minute
It can be tempting for probate practitioners to leave the administration of foreign assets to the end. It’s understandable as it’s the part that is unfamiliar territory, however it’s really important to be proactive and get advice from a foreign lawyer straight away so that you can consider the implications of any foreign assets from the outset.
There’s a lot to be considered. Are there are any deadlines in the overseas jurisdiction for filing documents or making inheritance tax payments? Is there a foreign will? Does this will intentionally or unintentionally revoke the UK will or alter who has the authority to act in relation to the foreign assets?
Can the UK Grant be resealed to deal with assets held in that particular jurisdiction or is a separate inheritance process required?
Will Medallion Signature Guarantees or overseas bankruptcy searches for beneficiaries located abroad need to be budgeted for?
It’s best to get to grips with the requirements of the foreign jurisdiction from the outset and get any necessary advice and information sooner rather than later to avoid complications and delays. Often the foreign process can run simultaneously with the UK process to ensure the entire estate is dealt with as expediently as possible.
Consider the effects of currency exchange on overseas assets
There are 2 currency considerations to bear in mind when dealing with estates with foreign assets. The first is the potential for fluctuation in the exchange rate which would affect the value of the asset. This highlights the need to deal with foreign assets as promptly as possible so as to avoid criticism should any delay result in a decrease in value. As a private client solicitor, I was reminded to administer any shares quickly due the potential for fluctuation of share prices, but no-one ever mentioned the effects of currency fluctuations.
The second point, and perhaps the even more important, is to consider the impact of currency exchange and the most cost-effective way to repatriate the funds. I always recommend that UK solicitors consider the effects of currency exchange on the value of overseas assets when transferring funds internationally and advise their clients accordingly.
Failing to consider the most cost-effective way of repatriating the foreign assets (or distributing funds to beneficiaries abroad) can, however, unnecessarily cost the estate/ beneficiaries a significant amount of money.
To ensure that you’re acting in the client’s best interests (and to avoid liability to you and your firm), I always recommend contacting an FCA regulated currency exchange specialist to assist with the transfer of funds internationally, as their superior exchange rates can typically save the estate up to five per cent of the amount transferred. In many cases this saving can easily cover your legal charges for dealing with the estate administration, so it’s a great way to offer added value to your clients!
Seek advice from a lawyer in the appropriate jurisdiction at the earliest opportunity
The laws that can apply overseas can often be surprising and, on occasion, bizarre. Every jurisdiction is different. So, always get advice from a lawyer in the foreign jurisdiction as early as possible to avoid any unnecessary and potentially embarrassing scenarios.
A couple of examples to illustrate the point: I was recently contacted by a UK solicitor who wanted to instruct a Spanish lawyer to put into effect the lifetime transfer of the client’s Spanish property pursuant to his estate and tax planning report for their client. However, the UK lawyer hadn’t considered that there is gift tax in Spain which completely undermined the whole tax mitigation plan.
We also assisted a UK lawyer who unnecessarily cost his client c. $90,000 in US inheritance taxes after incorrectly completing a US tax form. Fortunately, we were able to claim a refund, but it was a very stressful, not to mention embarrassing, time for the solicitor which could have been avoided if he’d consulted a lawyer in the foreign jurisdiction in the first place!