Intricacies of the expat will

09:26 El NACHO 0 Comments

Younger sons joined the army or the church and daughters were married off. The wife of the "tenant for life" (Jane Austen’s Mrs Bennet being a typical example) lived with the constant fear of being thrown out of the house should her husband die – an effective incentive to produce a male heir or to encourage a daughter to engage the affections of the distant cousin who would be measuring up for carpets ready to move in.
This somewhat ruthless approach resulted in the preservation of many of the largest English landed estates, whereas in most of Europe the Napoleonic code meant that property had to be divided between children, and the Anglo-Saxon trust was treated as an undesirable product of an effete and feudal society.
Both systems have developed over the years but the two are still very different, and for expats with assets spread around the world to plan properly, not only do they have to understand the systems in each country where they have assets, they also need to be aware of the rules that govern the interaction (or lack of interaction) between those jurisdictions (known, with some justification, as the conflict of laws).
The objective of succession planning has remained much the same, namely, to ensure that your hard-earned wealth is passed down the generations as efficiently as possible and is not squandered along the way by feckless or bankrupt beneficiaries, divorce, gold-digging ‘last-minute’ spouses, ungrateful children, rash investment or punitive taxes. In more volatile jurisdictions, succession planning may also reflect the need for discretion with the aim of keeping a sufficiently low financial profile to reduce the risk of governmental appropriation or kidnap.
The basic tool of succession planning is of course the will. Everyone should have one.

In the context of an international estate though, there are pitfalls. Will it be recognised as valid in each of the countries where there are assets? Will the dispositions be overruled by local law? Who will be responsible for dealing with it all when the time comes? Will the particular form used create complications in any of the relevant countries and is it better to have one will covering everything or separate wills in each jurisdiction where there are assets?
The first point is to ensure that the will is 'formally valid' and is recognised as a will in each country where there are assets. Most common law countries (such as the UK) provide that the will has to be signed by the testator and witnessed by two independent witnesses.
Civil law countries (most of Europe), on the other hand, require either a handwritten will or a will that has been drawn up by a notary.
Fortunately, there is a Hague Convention under which most countries agree to recognise wills drawn up in accordance with the law of the testator's nationality, residence, or domicile, or the law of the country where the will is signed.
A will may be perfectly valid as a document though, but still include provisions that the local law will not give effect to. Many European (and Islamic) countries have rules as to the slice of the estate that can be left (or given during lifetime) to anyone other than close relatives. If these limits are exceeded then there are rules by which the relatives (usually children) can claim their due proportion of the estate. In some countries (such as Spain) a will is automatically void to the extent that it disregards the local 'forced heirship' rules. In other countries (such as Italy) the children (or other heirs) actually have to make a claim.
This is further complicated by the issue of whether it is the domestic law of the country where the assets are held that applies or the law of the testator's residence, domicile or nationality.
Finally, irrespective of the strict legal position, there is the practical issue of who is going to manage the estate and whether in terms of expense and administrative convenience it is more practical to have multiple wills or one worldwide will.
Theoretically, it is better to have one will so that it is clear who is responsible for dealing with the estate (the choice of executor is crucial), who is responsible for paying what tax where and from where any liabilities, administration expenses or tax should be paid.
This is fine if the will is very straightforward. The catch is that in many places the authorities and the local lawyer who will be dealing with the practicalities will find it easier, quicker and cheaper to deal with a will in local form, in their own language, and with provisions that they understand and are used to dealing with.
Certainly a rural French notaire will be happier dealing with a simple holograph French form will limited to dealing with property there rather than a 20 page English will setting up complex trusts.
If you do have more than one will covering different countries, you must ensure that they tie in with one another. It is very easy inadvertently to revoke an earlier will by a later local will that is intended to cover assets in just that one jurisdiction.
At the more advanced level, of course, there is a positive cornucopia of tools available for succession planning. Trusts may have fallen out of favour in the UK in recent years due to more stringent Inheritance Tax rules but they can still provide flexibility and protection against external events; there may also be significant tax advantages for trusts where the settlor is not domiciled in the UK. Family limited partnerships are the latest fashion and there is much to be said for the humble joint account. From the more European end of the spectrum there are all sorts of other structures, Anstalts, Stiftungs and the like, all of which have their own advantages and disadvantages.
Get local advice, but whilst this is undoubtedly important, it is equally important to ensure that someone has a bird’s eye view so that the advice is coordinated and the pieces of the jigsaw fit together.