More and more people today own assets in countries other than the one they choose to live in. This is especially true in a country like Scotland that has such close neighbours – statistics from the Registers of Scotland show that 8% of property in Scotland in 2015 was bought by people from the rest of the UK or beyond. Similarly, many Scottish residents will have acquired property beyond their borders.
Dealing with the tax implications and administration of foreign assets is complex enough while you’re alive – but what about after you die? What happens to your property abroad after you’ve gone?
You, your estate and the law
Nobody likes to think too often about what will happen when they die.
However, the ostrich technique of dealing with the issue doesn’t solve many problems – it’s hard to see what impact your actions could have with your head in the sand!
One of the most common issues we come up against is people thinking they don’t need a Will yet. The assumption is that Wills are only necessary if you’re older or sick, and even then, it’s surely common sense who your assets would go to, isn’t it?
Unfortunately “common sense” is sometimes lacking in the legal system! Things need to be arranged according to the law. Even for people who live in Scotland and whose assets are all in Scotland, this can throw up surprises.
Where do you call home?
When you live or were born in one country, and own or hold assets in another, things can get even more complicated.
For example, if you are not originally from Scotland, but you now live here, you will need to consider both your current residence and your future intentions about where you want to live. These should be discussed with a professional advisor, as together they will make up the legal concept of your ‘domicile’. Your domicile will determine under which country’s laws the distribution of your estate will be governed following your death, and will also impact on the tax due on your estate.
Scots Law here and abroad
If you are originally from Scotland and still live here, your Scottish Will can cover your estate worldwide, with the exception of land and buildings situated outside Scotland.
How land and buildings are transferred to your survivors is determined by the law in the country where these assets are situated.
This can have surprising results, as some country’s systems of distributing assets may not meet your expectations or wishes. For this reason, you need to have a “land and buildings” Will in place in each country where you own land and buildings, as well as having your main Scottish Will in place here.
How do you wind up an estate?
In the majority of countries, a legal process often called probate is required before assets can be sold or transferred following a death. Even with a valid foreign Will in place, foreign probate can be a mammoth task.
When a person dies without a valid Will, this is called intestacy. When dealing with an intestate estate, there are often additional steps required in order to prove who the deceased’s family are, who is entitled to administer the estate (manage how it is settled) and who is entitled to inherit. Without a Will these may not necessarily be the people you would have chosen. It is also often necessary to use money from the estate to put a special form of insurance, called a bond of caution, in place, as this insures against potential errors that may arise during distribution of the estate. These necessary extra steps can cause more stress for those you leave behind and drag the process out.
Foreign intestacy is a costly business
These procedures become even more complex when they apply across different countries. For land and buildings situated overseas, foreign legislation and courts will determine who inherits your estate in place of a valid Will.
As you can imagine, this will bring about further expense, as there will be additional court and processing fees and those you leave behind will require meetings and correspondence with solicitors in each country. This is a hurdle you can avoid by putting a valid Will for that country in place during your lifetime.
Failing to put the appropriate land and buildings Wills in place for your foreign assets will have serious implications on the time and cost of winding up your estate after your death, which will add to the worry and stress of your beneficiaries.
As you can imagine, with time comes cost. The greater the number of processes and procedures to be carried out, for example translation or genealogy research, the more time is spent on administering the estate and the larger the bill. In addition, the postal system to some countries can also slow down or frustrate the process.
More Wills, Less Troubles!
The process for obtaining foreign probate with a valid Will is still quite complex, but it is far cheaper and more straightforward than settling a foreign intestate estate!
With a valid Will written to comply with the legal requirements in the necessary country, your solicitor in Scotland (or wherever your main residence is) will have a much simpler task of administering the estate. This will reduce the time spent on the matter, meaning less expense and a quicker resolution. Most importantly however, your loved ones will not suffer the added stress that a drawn out probate process can create, and they will have peace of mind that your wishes are being carried out exactly as you would have wished.
By being proactive now, and obtaining suitable legal advice in every country where you hold land and buildings, you are ensuring that your estate will be transferred to the beneficiaries of your choice in the quickest, cheapest and least stressful way possible.