When over 4.9 million UK citizens are choosing to live abroad, a figure that is rising, what does this mean for the issue of inheritance tax and probate?
There are 1.3 million people born in the UK that live in EU countries, according to 2017 estimates from the united nations (UN). This is a significant increase from 2010-2011 statistics that predicted 900,000 were long-term residents in other EU countries.
Additionally, the 2015 statistics, published by the EU, predicted that 3.7 million UK citizens were living outside the EU. Expat’s face many issues that complicate the Will-writing process. Having a clear and confident understanding of probate issues for any foreign estate is crucial to avoid creating an added burden to already grieving relatives.
This should be a similar concern for non-dom residents of the UK that were born in other countries. Statistics taken from Full Fact, indicate: “In 2017, around 1 in 10 of the population of the UK had non-British nationality (6.2 million) – again, this has been steadily increasing year-on-year and the majority (61%) of these held EU nationality (3.8 million).”
Nicola White, Migration Statistics Division, Office for National Statistics: “Non-UK born and non-British populations continued to increase in 2017, as more people continue to come to the UK to live than move to live abroad for a year or more.
“Poland-born residents and Polish nationals were the most common populations from outside the UK, with an estimated 1 million Polish nationals now living in the UK. However, the largest increases in population were seen from those born in Romania and those with Romanian nationality.”
Many people living and owning property outside of their origin of birth are increasingly finding similar problems when it comes to their Wills. Many anxieties stem from the amount of inheritance tax an estate is liable to pay. Similarly, it seems that despite a Will, who your assets are passed to could be determined by succession laws as opposed to a person’s direct wishes.
Paul Flude, Attorney of the High Court of South Africa and Family Office Advisor, has stated: “If you are tax resident in one country, but hold foreign assets in another jurisdiction, you may be liable to death duties in that second jurisdiction. A professionally-planned Will (and establishing more than one Will to cover assets in other jurisdictions) can avoid potential problems for your heirs, and add significant value to your estate.
“Given the complexity of preparing Wills per jurisdiction, it is strongly recommended to get professional advice per jurisdiction. For example, if you have multiple Wills that are specifically limited legally and geographically to your UK, South African, and Australian assets, but you also have assets in the Isle of Man, you would die intestate in the Isle of Man if you do not have a separate Manx Will (with the added probate costs associated with winding up an intestate estate in an offshore jurisdiction). Probate may not be avoidable by Manx laws, but having a separate Manx Will to cover Isle of Man assets will create certainty, avoid delays and a potential court application.”
Issues pertaining to succession and where a Will is valid is also determined by location and agreements made between the UK and other countries. UK Wills are recognised by English speaking ex-colonies and vice-versa. EU countries are increasingly moving towards mutual recognition of Wills. This could mean that the explicit and final wishes a person may have, could be dismissed because of conflicting succession laws associated with the country of domicile. When so many agreements between different countries are continually being made, amended or broken, it is difficult to establish, with any degree of certainty, where a person stands.
In a time when the movement of people between countries is increasingly fluid, and over 30% of expats are over the age of 51, people should be hyper sensitive to issues regarding the validity of their Wills in the country they choose to live in.
Have you experienced families affected by expat domiciles and their Wills? Is this an issue that people are drastically ill prepared for? Should there be greater Government help with inheritance issues concerning expats and non-dom citizens?
