Wealden Times | WT200 | October 2018 | Kitchen & Bathroom supplement inside

ADVERTISEMENT FEATURE
Key considerations for
dealing with cross-border estates
Many UK residents are living
the dream of owning a holiday
home abroad or moving overseas
permanently for their retirement – but
this can mean huge complications
for their beneficiaries when
they die. Partner Kate Arnold
from law firm Cripps outlines
some of the major problems.
Negotiating a completely different
legal system in order to deal with these
overseas assets is no easy matter as laws
of other countries differ widely, and
often conflict, with the law in England
and Wales. The way in which estates
are taxed may also differ widely – for
example in the UK the executors bear
the responsibility for reporting on
and paying the inheritance tax, but
in much of the EU this responsibility
falls to each beneficiary.
While succession laws in England and
Wales allow individuals to direct how
their assets should be inherited, this
is not the case everywhere. In much of
the EU, forced heirship rules dictate
how assets pass to the deceased’s next
of kin, with fixed percentages passing
to a surviving spouse or children.
UK residents who produce separate
Wills dealing with their foreign assets
may find themselves unsuspectingly
caught by these provisions.
The EU “Brussels IV” regulation allows
an individual to apply English law to
property owned in other EU countries,
which can be particularly useful where
rules of forced heirship would otherwise
apply. While this legislation is set
to remain in place for UK residents
post-Brexit, the way in which assets
in the EU will be taxed remains
less certain. In Spain, for example,
residents of the European Economic
Area (EEA) can inherit up to €1 million
before there are any inheritance tax
charges. If the UK leaves the EEA
after Brexit, however, the allowance
available to any UK beneficiary of
Spanish assets will drop dramatically
to between €13,000 and €15,000.
Under Spanish law the beneficiaries of
an estate have six months from the date
of death to accept the inheritance and
to submit an assessment to the Spanish
tax authorities. This time period can
cause problems where the executors
must first obtain a UK Grant of Probate.
In order to accept their inheritance,
all beneficiaries must attend the local
Spanish civil office in person to sign
the necessary documents and to apply
for Spanish identity numbers (NIE
numbers). Alternatively, they can
appoint a Spanish lawyer to act on their
behalf at the signing meeting and on
the application for NIE numbers. The
lawyer must be appointed as attorney
by each beneficiary and executor
to deal with the Spanish estate.
In France, the beneficiaries are deemed
to have inherited the deceased’s assets
immediately on death, as set out under
the terms of the Will. The beneficiaries
are responsible for administering
the estate and dealing with the tax,
with the executor overseeing the
process. Where executors in the
UK are seeking to deal with French
property under an English Will, it will
be necessary to do so through a French
Notaire who must be provided with
a translated version of the Grant of
Probate, death certificate and UK Will.
Executors dealing with assets in the
US will find themselves faced with a
legal process that varies from state
to state, with some regimes more
onerous than others. Specialist legal
advice will be required, tailored to
the laws of the state in question.
Complications with overseas assets can
be minimised through careful drafting
of Wills, taking account of the foreign
assets. Despite this, the executors
will almost certainly need to engage
a lawyer in the country in question to
assist with foreign assets. Ideally, this
lawyer will also have an understanding
of the English legal system and the
administration of cross-border estates.
Cripps has a team of dedicated private
client professionals who are experts
in handling cross-border estate
matters and through contacts and its
international Marcalliance network, can
refer matters to lawyers abroad where
necessary, in order to streamline the
process of administering the estate.
If you would like more information
on this, please contact Kate Arnold at
kate.arnold@cripps.co.uk
or on 01892 506 337.
www.cripps.co.uk @crippslaw This article gives examples and is intended for general guidance only