Checklist For Estates with Overseas Beneficiaries.
If you are dealing with an estate where there are beneficiaries located abroad, there are a few additional issues that need to be considered….
1.International Bankruptcy Searches
As you will know, it is incumbent on solicitors to undertake a bankruptcy search for each beneficiary before distributing inheritance funds to them. This mitigates the risk of the PRs and solicitors being subject to a claim from a bankrupt beneficiary’s creditors.
A bankruptcy search should still be undertaken even if the beneficiary lives abroad. The Land Registry bankruptcy search only includes bankruptcies in England and Wales. If the beneficiary lives in another country, a bankruptcy search should be carried out in that country.
The International Bankruptcy Searches website provides bankruptcy searches in most countries. You can order overseas bankruptcy searches via the website or by email. The prices and timescale for searches are set out on each of the specific country pages.
2. Getting Valid ID Documents
You will of course know the importance of ensuring that you have verified the identity of the beneficiaries before sending any payments to them. This will usually involve the beneficiary sending their original or a certified copy of their identity documents to you.
Beneficiaries located abroad are unlikely to want to post their original documents overseas.
Best practice is to ask the overseas beneficiary to provide a copy of their ID, certified by a notary public and legalised /Apostilled in their own country. It is then possible the verify the authenticity of the document using the details on the apostille.
3. Consider the Currency Exchange
Beneficiaries located abroad will likely request that you make the payment of their inheritance to their bank account in their home country.
When distributing funds to a foreign bank account it will usually be necessary for the payment to be converted from Pounds Sterling to another currency. Often the offered exchange rate is poor and the transfer can often considerably erode the amount of the inheritance payment received.
In order to act in the best interests of the estate and preserve as much of the inheritance funds as possible, it is advisable to consult recommended currency broker who can convert the currency and arrange the transfer at a favourable rate, saving the beneficiary hundreds if not thousands of pounds depending in the amount being distributed.
If you are dealing with an estate where funds need to be distributed abroad (or indeed if there are assets abroad that need to be sent to be collected in to a UK account) we will be happy to recommend a currency broker to assist with this at a favourable exchange rate.
4. Double Taxation
Beneficiaries resident abroad may need to pay tax on their inheritance in their home country, even if UK inheritance tax has also been paid.
Overseas beneficiaries can however often be entitled to receive tax refunds or relief to prevent or limit double taxation
The credit or relief may need to be claimed from HMRC or information about UK taxes may be requested by the beneficiary so that they can make a claim in their country of residence. Therefore, it is always worth considering the tax position to ensure the correct application will be made to HMRC or so that you can provide the beneficiary with the valid information to limit, or even avoid, double taxation as much as possible for the overseas beneficiary. If you are dealing with an estate where there are beneficiaries located abroad or an estate where there are assets abroad, Worldwide Lawyers will be happy to help. Please feel free to call 01244 470339 or email info@worldwidelawyers.co,uk with any queries.
