Wealden Times | WT165 | November 2015 | Gift supplement inside

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Protect your assets abroad
Overseas tax and legal issues are affecting
increasing numbers of families in the UK.
Amanda Chapman, head of the International
Group at Cripps, looks at some of the common matters
that arise and how they should be addressed.
What do you mean by ‘international’?
As individuals and workforces become increasingly
mobile, there are all kinds of reasons why the ‘average’
family in Kent might find themselves having to deal with
the rules and regulations of a foreign country. Often it
is the purchase of a holiday home but other examples
include children studying overseas, a son or daughter
marrying a foreign national or a family business
opening an overseas office.
Why does this matter?
It is easy to be adversely affected by another country’s
tax or legal system without realising it, and proper
care and planning may be required to mitigate any
problems.
An individual’s residence or domicile status will have
an impact on how they are taxed in both jurisdictions.
The location of a company may similarly give rise to
complex tax issues, while the whereabouts of a holiday
home may impose strict rules on the inheritance of that
property.
Why are ‘residence’ and ‘domicile’ important?
These are tricky concepts. Fortunately we have
relatively clear legislation in England which determines
where an individual is resident for tax purposes,
namely where they are living (and often working or
bringing up the family). The concept of domicile is
more difficult, but in broad terms it has a higher degree
of permanence and is often the jurisdiction from where
someone originates.
In very simple terms, an individual’s residence status
will affect how they are taxed on income and capital
gains. A person’s domicile will have some impact on
how they are affected by inheritance tax on gifts they
might make, or their estate on death.
How do succession rules in other countries differ
from the UK?
For the most part we are relatively free to leave our
assets to whomever we choose – but this is not always
the case in other countries. For example, someone
owning a holiday home in France may not be able to
leave that property directly to a spouse if there are
living children – the children would be entitled to
inherit a portion of the property. New EU rules which
came into force earlier this year help mitigate the effect
of these restrictions but it is important to specify in your
will that you want your estate to be dealt with under UK
law.
Why are these issues important from an estate
planning perspective?
In trying to reduce the amount of tax you have to pay,
whether during your lifetime or on death, the starting
point is always the residence and domicile status of the
individual – all planning flows from this and is impacted
by it. Planning for the next generation requires
careful consideration where there may be a change
of residence by a child, or a marriage by a child to an
individual governed by the laws of another country.
Complications may arise if an estate includes non UK
assets. All possible ramifications must be considered
and the appropriate mechanisms put in place to protect
the family assets. Advice should be sought as early
as possible in order for all possible changes in the
circumstances of the family to be considered.
For individuals, are there any other international
legal issues which may affect them?
As well as all the tax and succession aspects of living,
working and investing in the UK, international issues
may also have an impact on the breakdown of a
marriage where one or both of the spouses comes from
overseas. There may be a foreign nuptial or marital
agreement which requires consideration, or one party
may contest that their jurisdiction has authority over
the divorce proceedings (which may or may not be
favourable to the other party).
For further advice or information please contact:
Amanda Chapman - Partner
T - 01892 506 091
E - amanda.chapman@cripps.co.uk
Cripps is a key regional law
firm serving clients nationally
and internationally from
offices in Kent and London.
Recognised countrywide
for both its commercial
and private client work
and Legal Team of the Year
(Midsize) in the 2014/15
STEP Private Client Awards,
the firm focuses on wealthier
families, entrepreneurial
businesses and the real
estate sector.
www.cripps.co.uk @crippslaw This article gives examples and is intended for general guidance only