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Expat Estate Planning

Information about how to plan your estate to ensure that you and your estate are both protected from unnecessary inheritance tax

Last updated 18 September 2019

When you die you are likely to want to pass your estate on to your loved ones. When this happens, all you assets are likely to be hit with inheritance tax. Estate planning is the process of planning your estate to ensure that the value of your assets does not diminish unnecessarily, while also ensuring that key elements of your estate are handled correctly.

When should you start planning your estate?

You can start planning your estate at any stage in life, but it is important to do so once you have substantial assets which you need to manage in the event of your death.

Who can help me?

You will need to discuss your estate plans with someone who is qualified to provide advice on such matters. As a British expat, there are a number of additional factors to consider, such as the rules of your country of residence, different financial structures for you to consider and also local customs. It's important, therefore, to also seek financial advice to help you minimise any tax burdens.

What's included in an expat estate plan?

Estate plans are unique to every situation, but typically include the following:

  • Creating an expat will
  • Minimising taxes by setting up the appropriate financial structures, such as trust accounts in the name of beneficiaries
  • Guardianship of living dependants
  • Naming of an executor of your estate
  • Creating/updating beneficiaries on your various financial plans
  • Pre-organising and potentially paying for your funeral arrangements
  • Setting up a power of attorney to direct other assets and investments

Trusts and estate planning

Trusts are a major tool of estate planning. There are many advantages for forming a trust, including tax benefits, management of your assets, asset growth and so on.

Reducing your inheritance tax liability can take a fair amount of time and planning. Start planning as soon as possible to ensure that you don’t face tax penalties further down the line. If you require assistance in this area then your first step should be to contact Experts for Expats. We have advisers based in your local area that can provide you with the necessary expertise to determine what action you can and should take with regards to your own estate.

Whoever you are and whatever life stage you are at, you should always have one eye on your estate. As with many things in life, starting early makes things easier rather than harder. Organising your estate should only need to be done once and it may be the most important financial decision that you’ll ever make. Without proper planning your family may be faced with a large tax bill when you die. They may even need to sell assets including the family home to pay it.

While a simple Will is effective for UK residents in determining who should receive the estate, the one certainty of this is that the UK Government will take their share first – currently 40% of any assets beyond the level of £325,000.

Gifting your assets to an ownership entity more than seven years before your death may completely exempt your estate from UK Inheritance Tax (IHT).

UK Residency vs. Domicile

The length of time you have lived abroad may not matter to HMRC – even if you’re not liable for income tax, capital gains tax or any other type, you may still be liable for inheritance tax (IHT). The test for IHT isn’t your residency but rather your domicile. Also, there isn’t an absolute test of domicile and if there were, you might re-establish domicile later in life (for example by buying a property for your children to live in).

The normal test for IHT domicile is whether you’ve lived outside the UK for at least three years. However if you have been resident in the UK for seventeen of the past 20 years, you may be deemed a UK domicile. Furthermore, for non-domiciles, IHT will still apply to property situated in the UK. For more information and advice with regards to UK domicile, contact Expert for Expats now.

Your Personal Circumstances

Trusts also work well for managing divorce, complex families and for business owners to protect their personal assets from future creditors (where the business was healthy at the instance of trust formation).

Advice on Estate Planning

We have advisers in your local area that can provide guidance on all aspects of estate planning. Submit your details using the form and we will arrange for one of our local advisers to contact you who will be able to discuss your own circumstances and requirements with you in a no-obligation initial conversation and from there establish what your best options are and whether they can help you going forward.

Experts for Expats has been featured in...

The Observer - How to relocate overseas - click to see article
Saga - Want to retire in the EU? What could the future hold for you? - click to see article
The Telegraph - The surprising places British expats can earn the most - click to see article
The Guardian - The older expats facing poverty – thanks to Brexit and frozen pensions - click to see article
The Times - Thousands of retiring Britons vote for Brexodus - click to see article
BBC Breakfast - Expats in Cyprus having issues with UK bank accounts - click to see article

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