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Managing Your Assets Abroad After Brexit

on Tuesday, 23 March 2021.

The start of 2021 marked the end of the Brexit transition period and the start of a new relationship with continental Europe. Many British families who live at, or own a second home in an EU country need to know how this will affect them.

Whilst there may be limits on how long individuals can spend in their second homes in the EU and there may be increased property taxes, in terms of the law relating to Wills and estate planning there are few immediate implications for private clients as a result of Brexit.

The EU Succession Regulation

One reason is that the UK was never a signatory to the EU Succession Regulation.

Even though the UK was not a signatory, the EU Succession Regulation was still able to affect UK citizens with second homes in EU Member States, or those habitually resident in an EU country, and the position remains the same after Brexit. UK nationals resident in the UK can still elect for English law to apply to the succession of their home in the EU - for example, to avoid forced heirship.

Should You Make One Will or Two?

Whilst it is possible to make a single Will that will cover your worldwide estate there can be advantages to making multiple Wills if you have assets abroad. Having a Will in each country where you have assets can speed up the estate administration process.

If there is only one Will it may need to be translated and notarised in the foreign jurisdiction.

However, in countries such as Spain, where a Will must be witnessed by a notary, it may be advisable to make a single Will to cover the worldwide estate, if accessing a notary causes practical problems.

The key is to take specialist advice and ensure that your English lawyer works with a lawyer in the other country so that the Will takes effect as desired in the other jurisdiction.

Managing your international assets Feb21

Tax Advice

It is important to consider what inheritance tax will be due on your death.

Your estate’s exposure to UK inheritance tax is determined by your domicile. Your domicile is broadly where your permanent home is considered to be and, if you were born in the UK to British parents, you will usually have a UK domicile of origin. If you are domiciled in any of the constituent parts of the UK, then UK inheritance tax will apply to your worldwide estate.

If you are not domiciled in the UK at the date of your death, only your UK assets will be liable for UK inheritance tax. You can live abroad for many years and still retain a UK domicile of origin, so it is worth taking advice when estate planning to work out where tax will be payable.

If you make two Wills, it is important to consider on which assets you want the burden of tax to fall. If you make two Wills you would usually limit your UK Will to paying UK inheritance tax, unless you specifically want any tax due in a foreign jurisdiction to be paid from your UK estate.

Possible Changes to Inheritance Tax Allowances

Legislation relating to inheritance tax allowances has not been amended since the UK left the EU. This means that, for the time being, inheritance tax exemptions for gifts to EU charities, and reliefs in relation to EU business property/assets and agricultural property are still available.

So if a UK-domiciled individual makes gifts to EU charities, or has business or agricultural property in an EU state, exemptions/reliefs from inheritance tax may still apply.

It is important to be aware that this may change now that the UK is no longer an EU Member State.

For specialist legal advice on managing your overseas assets, please contact Angharad Lynn in our Private Client team on 07500 042044, or complete the form below. You may also be interested in our online guide, 'Managing Your International Assets'.

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