In an increasingly international community, more and more people are investing in property abroad, holding bank accounts in multiple countries, as well as having shares and other investments in foreign countries.
This means that handling probate abroad is also on the rise, and it can be a challenge. Cross border inheritance rules and taxation issues can mean that the administration of foreign estates can be complicated and time-consuming.
Dealing with estates where there are foreign assets can be complicated and a lawyer in the foreign jurisdiction should be consulted as soon as possible. If you are a lawyer or personal representative dealing with an estate with foreign assets, contact Worldwide Lawyers on 01244 470 339 or at email@example.com to discuss how we can help you to deal with the foreign estate efficiently and cost effectively.
Inheritance and tax laws can vary significantly between different countries, but here are a few things to consider when handling wills and probate matters with assets abroad…
1. Check whether there are any foreign wills
One of the first tasks when dealing with the administration of an estate is to establish whether the deceased held a will.
It is possible, however, that the deceased had multiple valid wills in different countries.
For example, when buying property abroad purchasers are usually advised by their foreign lawyer to make a will in that country to cover that property. If someone has lived in a country for many years, they may have at some point made a will there, and that will may still be valid.
If you are dealing with a deceased who has interests in foreign countries, care should therefore be taken to identify whether there are any wills in any other countries which may affect the administration of the estate and /or specify how the foreign assets are to be dealt with/ who will inherit the foreign assets.
They should also be reviewed to check that the foreign will does not actually revoke or conflict the will you have in front of you or visa versa.
In some European countries – including Spain, France and Italy – there is an official central wills registry, which can be used to check whether a foreign will has been made, which is the most recent version and who holds the original will. Verifying this should be a first port of call when dealing with probate abroad and can save a lot of time, trouble and embarrassment in the long-term.
A death certificate is normally required to access the information held by the central wills registry and foreign death certificates, ordinarily, must be legalised in the country of issue and translated, if necessary, by an approved translator.
If you are dealing with an estate administration with foreign assets, contact Worldwide Lawyers on 01244 470 339. We can provide free information, guidance and recommendations for English-speaking foreign lawyers.
2. Consider any deadlines in the foreign jurisdiction, and don’t delay!
Failing to consider deadlines in the foreign jurisdiction, such as the notification of death, the inheritance tax payment due date, for instance – is a common, but costly mistake. It is therefore important to find out this information from a lawyer in the foreign jurisdiction as soon as possible, to ensure that any deadlines are met.
Foreign Inheritance Tax
Even if the estate in the UK is not subject to UK Inheritance Tax, inheritance tax may be due in the foreign country so you will need to quickly establish this and ascertain if there are any deadlines that need to be considered. If you wait until the UK estate has been dealt with before turning to deal with the foreign assets you may find that the estate or beneficiaries will be liable to interest, fines and/or penalty charges.
You may also need to ascertain whether there are any liquid assets available that may need to be used to settle any foreign taxes.
The six-month rule, regarding the payment of inheritance tax, is common across most European countries, however, it should be noted that there are differences between each country as to when that period starts from. In many countries, such as Spain and France, the payment of inheritance tax can be extended . However, an extension application must be filed within a certain period of time. In Spain a 6 month extension for paying Spanish inheritance tax a can be obtained by applying for the extension by the end of the fifth month following death. In France, the tax authority is able to grant even more additional time – up to three years, and 10 years in the case of business inheritance – to pay the taxes due, but an application must be made in time.
Given that some countries charge interest if the inheritance tax is not paid on time, it’s important to check these details out in advance as it could save the estate/ beneficiaries unnecessary charges.
Accepting and declining inheritance from abroad
In some jurisdictions, the beneficiaries are required to formally accept or decline their inheritance and there are usually tight deadlines in relation to this.
It should also be noted that in some countries, the beneficiaries inherit both the assets and the debts of the deceased. The beneficiaries may need to take action to ensure they receive their inheritance or are able to waive their inheritance in the event that the debts exceed the assets. In Germany for example, a client is deemed to accept the inheritance if it has not been waived within the applicable deadline.
Registering a death
For example, while in UK the deadline to register a death is five days (eight days in Scotland), in Spain and France a death must be registered within 24 hours, whereas in Portugal, you have 48 hours to register a death. While it’s likely that the registration of death will already have been dealt with by the time an heir seeks legal advice, it’s worth checking.
If you need any help navigating the complexities of probate in a foreign country give our team a call on 01244 470 339 or email us at firstname.lastname@example.org
3. Consider the effect of currency exchange on the value of the assets.
When re-patriating assets from a foreign country to the UK, the exchange rate can drastically affect the final amount of inheritance received, especially when dealing with large estates. High street banks offer very poor exchange rates when overseas funds are directly transferred into a UK bank account (including an executors or a solicitor’s client account). Plus, they often charge additional fees and commissions just to move money from abroad.
The most cost-effective way of receiving or sending money internationally is to use a reputable currency exchange specialist, who can assist with transferring the money and converting the currency. Typically, currency exchange specialists offer currency exchange rates that are 3-5 per cent better than high street banks, which means the client will retain 3-5 per cent more of the funds. For instance, if you were transferring the equivalent of £100,000 directly into your client’s account, using a currency specialist to convert the currency could save your client up to £5000.
The services of a good currency specialist are usually free but can save the beneficiaries and estate a significant amount. Failing to consider this can unnecessarily cost the estate thousands of pounds and the executor/ solicitor could be deemed to not be acting in the best interests of the estate beneficiaries if this is not properly considered.
For details of a recommended currency exchange specialist and to discuss how they can assist you and your clients, please get in touch with Worldwide Lawyers on 01244 470 339 or email us at email@example.com.
4. Instruct a foreign lawyer
One of the most common mistakes lawyers or Personal Representatives make when dealing with an estate with foreign assets is to try to deal with the foreign assets without the assistance of a foreign lawyer.
In some cases, if the asset is very small for instance, it may be possible to deal with it without any formal legal process being followed in that country. However, in most countries the local inheritance process must be followed in order for the foreign assets to be released to the estate/beneficiaries regardless of the value.
For example, a Grant of Representation or Reseal is required to deal with assets in Malaysia and South Africa even if the value of the asset is small. In Spain and France, an Inheritance Deed will usually be required to deal with any assets held there.
It is also common for communication provided in English to be ignored by the bank, share registrar or whoever is holding the assets if that is not the local language.
Trying to deal with the foreign assets without the assistance of a lawyer in that country is likely to cause delay and increase costs long-term to the detriment of the estate and beneficiaries.
If you need the assistance of a foreign lawyer contact Worldwide Lawyers on 01244 470 339 or email us at firstname.lastname@example.org. Our friendly and knowledgeable teams who will be able to provide assistance and put you in touch with an English-speaking lawyer in the required country.