Is it necessary to have an English Will?
The purpose of a will is to communicate your wishes as to what will happen to your personal possessions after you die. It is a written legal document setting out the people you would like to inherit specified parts of your estate.
It is recommended that most people make a will so that they may specify who they want to inherit their estate and to avoid the complicated intestacy procedures necessary where there is no will.
The laws in relation to wills and inheritance in the jurisdiction of England and Wales are different to those in many other jurisdictions. If you have assets in England and in another country, the inheritance laws governing the assets in each country will need to be carefully considered when you are preparing a will, whether in England or elsewhere.
English law does recognise a will that has been prepared in another country if it complies with the laws of the country where the person making the will was domiciled, habitually resident or a national when the will was executed or at their death.
However, in certain circumstances it is recommended to make a separate English will dealing with your English assets. You should always consult a specialist lawyer to advise you as to what is best for you in your individual circumstances.
You will however need to ensure that separate wills do not conflict or revoke one another and that they work together to achieve the intended result. You should therefore ensure that any lawyer you instruct to prepare a will whether in England or in another country is aware of the contents of any other will that you have.
Who will inherit my English Assets?
Under English law a person making a will has “testamentary freedom” which means that you can choose whoever you want to inherit your estate and in whatever proportions as long as this is set out in a valid will.
Immoveable property (i.e. land, houses and flats etc.) located in England or Wales is always subject to the laws of England and Wales regardless of residency or where you are domiciled. For example English law would not recognise or enforce any claims pursuant to another country’s forced heirship rules in respect of immoveable property located in England or Wales. The beneficiaries would be determined in accordance with your will or the intestacy provisions if there is no valid will.
Moveable assets (i.e bank accounts, shares, personal belongings etc) are however subject to the laws of the country in which you are domiciled.
Will there be inheritance tax to pay?
This will depend on a number of factors and your personal circumstances.
As a general rule, if you are “domiciled” in the UK at the date of your death your worldwide estate (i.e not just the assets in the UK) will be liable to UK inheritance tax (IHT).
IHT is charged in the UK at 40%, however, everyone is entitled to a tax free amount (also known as the “nil rate band”) which is currently £325,000 (or up to £650,000 for married couples and registered civil partners if the “transferrable nil rate band” applies). This means that the combined value of your worldwide estate is calculated and only the amount that is over the tax free amount will be taxed at 40%. The tax is paid from the assets in the estate before they are distributed to the beneficiaries.
The question of whether or not a person is domiciled in a particular country for inheritance tax purposes is an extremely complex one. You should always obtain expert legal advice to ensure you understand how this will be dealt with on your death so that you can obtain the intended results for your beneficiaries.
Your “worldwide estate” includes the value of your assets in England and any assets that you may have in any other country. It may also include certain gifts that you have made in the last 7 years.
There may be some exemptions or reliefs available in respect of the amount of IHT payable depending on who your beneficiaries are and the nature of your assets. Your lawyer will be able to advise you about anything that applies to you.
If you are not domiciled in the UK, UK inheritance tax will only apply to your assets that are located in the UK.
Succession tax planning is extremely important if you want to ensure your beneficiaries get to keep as much of their inheritance as possible. Professional advice and careful planning can often make a significant difference to the amount of tax payable. You should always ensure that you get proper specialist advice in relation to your individual circumstances. Your lawyer can discuss inheritance tax planning with you as part of the preparation of your will.