How will Brexit affect your Will?

Property or Business Abroad: how will Brexit affect your Will?

Make sure your cross-border estate plan is up to date and legally compliant

How will Brexit affect your Will?Estate Planning when you have overseas property, investments or business interests brings an added layer of complication. Many are unaware of recent changes to the law that affect even those who have already made their Will.

And leaving a complex and valuable estate subject to intestacy laws “translates into increased revenue for the [tax authorities] and other government agencies and a decreased inheritance for one’s beneficiaries.”

When Brexit happens, it will bring a significant potential disadvantage to those who have interests in EU countries, or are thinking of buying property abroad.

So how can you protect your Estate when you have interests abroad? Does your estate fall under UK law, or is it governed by the law of the country where you have your holiday home or business holdings? Is there a difference in how it is treated whether it’s a holiday home, or a permanent expat residence?

Property in the EU: Legal changes post-August 2015, pre-Brexit

If you own property or business interests in the EU, you must update any Will or Estate Plan made before August 2015. And if you haven’t made one, you need to do so now!

Before August 2015, assets held in an EU country were governed by the rules of inheritance of that country. The UK is unusual in the EU in granting all citizens the freedom to leave their assets to whoever they want – the principle of testamentary freedom.

Other EU countries, such as France or Spain, often have rules which prevent children from being excluded from Wills, or prioritise children over surviving spouses.

So, for example, if you own assets in France and die without an up-to-date Will, then your spouse will inherit a quarter of your Estate and your children share the remaining three quarters. If you and your spouse are living abroad, this could cause significant complications for the surviving partner!

The good news is that, as of August 2015, a UK citizen can opt to have their entire Estate to be dispersed according to UK law. But to ensure this, you must make or update your Will to reflect your wishes and the change in the law.

This will most likely change when the UK ‘Brexit’s. While EU citizens with interests in more than one EU country will still be able to choose to be governed by ‘rule of nation’ rather than ‘rule of residence’, UK citizens will lose that option.

In any case, our choice of which country’s rules to be governed by only applies to distribution of your assets, not to tax on the Estate, so you may still need our specialist advice on managing tax implications across multiple countries.

Property outside the EU

If you have holdings or assets in a non-EU country, you should make an Estate Plan with a specialist Will Writer, who can coordinate with legal experts in the country (or countries) where you have interests.

You may possibly need more than one Will, and they should be written in coordination.

You should also plan ahead for probate, tax, funeral costs, and any other matters that may increase in cost and difficulty when you are gone and relatives are trying to identify assets, settle debts and arrange for legal services in an unfamiliar country.

Planning for your business

Your business (or your share of it) will be counted as part of your estate. If you die intestate (without a Will), then who inherits depends on whether or not you are married, or if you have kids (see here for a complete breakdown of who inherits when there is no Will).

Would your surviving spouse, or your parents want to take on the responsibility of running your business after you have gone? Who would represent your children’s interests until they turn 18?

And if you have a business partner(s), will they be happy to work with your beneficiaries, or will they be willing (and able?) to buy them out? How will your business partner feel if the business has to be sold to settle the Estate?

And if you have interests outside the UK, it becomes even more complicated.

If you have business interests and/or assets across a number of countries, you will need a comprehensive cross-border estate and death tax strategy designed for your individual needs.

We can work with your own financial advisers, lawyers and tax specialists – and with legal experts abroad – to ensure compliance with the law in multiple jurisdictions.

In addition to the usual issues of succession planning, and looking at the implications of benefits, management incentive plans, assets and tax exposure, if you or your business hold assets abroad you will need to review the effect that international tax and inheritance laws will have on your estate.

Again, this will require coordinated work between your Estate Planner in the UK and legal experts in each country concerned.

For more information get in touch with us at Just Wills and Legal Services on 01342 477102 to book a free consultation.

This article is for general information only and does not constitute legal advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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