With the ‘stay at home’ restrictions eased, there have been various reports in the press that property agents are seeing a continuing trend towards people looking to purchase a home abroad.
It is important, when looking to buy property overseas that you consider what will happen to it when you die. You may assume that it will pass via your Will, with the rest of your estate, to your named beneficiaries. However, it may not be that simple, as some countries have forced heirship rules, which cannot be overridden and dictate that your assets must pass in specified shares to certain family members.
The majority of EU member states signed up to succession regulations known as Brussels IV. Brussels IV states that the laws of the country where the individual was ‘habitually resident’ will apply with regards to inheritance of the property. Determining where someone is habitually resident may be very obvious in some circumstances but may be more complex and less clear cut if you have spent lengths of time in more than one country. There is also an option to elect that succession should be determined by the person’s nationality. Depending on where the property is situated, it may be advisable to include a ‘choice of law’ in your Will to cover this.
It may also be advisable to make a Will in the country in which the property is situated in addition to a Will in the UK. This can often make the estate administration process in the foreign country simpler and quicker. Caution should be taken when making multiple Wills though, not to inadvertently revoke any of them.
You will also need to consider how purchasing a property abroad will affect your inheritance tax position. This will differ, depending on whether you are classed as domiciled in England & Wales or not. Also, if the value of the foreign property is over £100,000 you will be required to complete the full, more complex, inheritance tax account (IHT400), which can make the estate administration slower. There may also be foreign inheritance tax to be paid in the country that the property is situated.
If you are buying or have bought Real Estate abroad and have not considered what will happen to it when you die, please contact your usual Wealth Preservation team member, who will be able to review your Will and provide advice to ensure that it passes to your intended beneficiaries. Equally, the above considerations apply to all foreign assets, not just property, so if you require advice regarding any assets that you own abroad, please do get in touch.