Foreign Estates, Domicile and Inheritance Tax

• Domicile
• Foreign Wills
• Foreign Estate Administration
• Overseas Probate Services
• Our specialist team

Domicile - Foreign Wills

In today's global economy, many more people have their assets located in more than one country. This raises enormously the complexity of their legal affairs, particularly relating to inheritance and tax, and it is important to have specialist foreign estate lawyers who can handle the difficult issues involved.

Domicile

The concept of "domicile" is crucial in this area. Most people assume that your domicile is the country you live in, but this is not necessarily the case, particularly where English law is concerned. It is also not the same as being resident or non-resident for income tax purposes.

Under English law, everyone has a "domicile of origin" which is usually the domicile of their father if their parents were married when they were born, or the domicile of their mother if not. This remains their domicile of origin throughout their lives and cannot be changed. You can, however, acquire a "domicile of choice" by moving to a different country and making it your permanent home with the intention to remain there for the rest of your life. This usually involves severing many of your ties to your domicile of origin and as a result it can be that people think they have changed their domicile when they have not. If you settle in another country, making that your domicile of choice, and then you move to a third country, until you have acquired a new domicile of choice, your domicile of origin will revive. This can also happen if you move between different areas of a country where inheritance laws can vary between federal states, such as Canada and the United States, as the different states are regarded as separate domiciles.

Foreign Wills

If you have assets in more than one country and you need to make a Will, it is a good idea to take advice in the country in which you think you are domiciled at the time. Your legal adviser will then probably advise you to take advice in the other countries in which you have assets. The most important thing is to enable communication between the different lawyers. You may be advised to have a Will in more than one country, but if you make a Will in France for example, and then make a Will in England, your Will in England might accidentally revoke the Will in France so great care is needed.

Most countries outside England have a legal concept called "forced heirship". This means that even if you have a Will that says one thing, certain categories of relations are automatically entitled to a certain proportion of the estate regardless of what it says in the Will. In some countries, even if there are no living relations who have such an entitlement, there can be significant tax penalties if you leave assets to someone who is not a family member. This is true in both France and Germany for example. It is important to remember that Scotland is a separate country for these purposes, and though the tax rules are the same as in England and Wales, Scotland does have a limited system of forced heirship where certain relations can "claim legal rights" in parts of the estate, so if you have moved between England/Wales and Scotland, it may be helpful to take advice in both countries.

If you have assets in a country which applies forced heirship, and you want to avoid the forced heirship rules, there may be ways round the rules, such as owning your holiday home through a company. If this applies to you, you should take legal advice at the time you purchase your foreign property and make a Will at the same time but if you haven't done so, you can often sort it out later on.

Finally, English law contains a trap for the unwary - any Will you have made is revoked by a subsequent marriage or civil partnership, unless the Will states that you were anticipating this at the time you signed it. There are many other countries in which this rule does not apply, but depending on the countries involved, if you are an English national you might accidentally revoke a Will you have made abroad. Again, this problem can be avoided if you take good legal advice.

Foreign Estate Administration

When someone dies and they have assets in more than one country, it is possible that more than one set of laws will apply to their estate, but not necessarily. Some countries, such as Spain and Italy, like to apply one set of laws to the whole estate regardless of how many countries are involved. This usually means they apply the law of the country of which the deceased was a citizen, so if an English person has a holiday home in Spain, it will usually pass according to English law and not Spanish law.

In contrast, England and France both apply different sets of laws to different parts of the estate. Generally, land and buildings pass under the law of the country where they are situated, and everything else passes under the law of the country of domicile (which may not be the same as the country of nationality).

If you find yourself appointed as executor where the deceased had assets abroad, it is very important that you take advice from a solicitor who understands these complexities because if you get started on the wrong track, you are likely to run up unnecessary legal costs which will lead to conflict with the beneficiaries.

If someone in your family has died without a Will and they had assets in more than one country, the question of which country's law applies becomes crucially important because you might be entitled to an inheritance under one set of laws but not another. In these cases it is as ever important to get good legal advice but it is also important to try to have an open and honest approach between family members as disputes about international estates prove to be immensely expensive.

Commonwealth Countries

If you are handling the estate of someone who has died with assets in England and Wales, and they were domiciled in a Commonwealth Country, you may be able to save some expenditure in dealing with the estate by a Resealing of a Commonwealth Grant of Probate. Please see our page on Resealing of Commonwealth Grants of Probate (need link) for further details.

How we can help - Our specialist team

At Pannone we are ideally placed to advise international clients. Our expert team have an unusually high level of experience in dealing with foreign inheritance issues, working closely with our International Property team who have particular expertise in French and Spanish inheritance and tax issues. We also benefit from our huge network of contacts through the Pannone Law Group and our links with major firms of accountants enable us to advise clients with property in most major jurisdictions and many smaller countries.

Call 0844 980 1429 or email for a consultation with a Trusts and Estate Planning Solicitor or Lawyer at Pannone LLP. We are available to take your call twenty four hours a day, seven days a week.