A timely reminder of the benefits of keeping assets offshore
Being an expat can be a complex business, especially when it comes to your finances and unfortunately it doesn’t always end once you’re gone.
Legislation introduced in the European Union this week has brought the importance of Wills into sharp focus.
From Monday 17 August, the law of succession in all countries of the EU – except the UK, Ireland and Denmark – will be governed by the law of the member state in which the deceased was habitually resident at death, not their original state.
This means if a UK expat living in Spain, for example, dies without a Will, the rules of Spain – not England, Scotland or Northern Ireland – will apply.
Taking Spain as an example, while the succession laws are designed specifically to look after the interests of children and spouses and so may be absolutely fine for your needs, there are quirks which may cause you problems. For example, children will receive a two thirds preference over the spouse. The spouse may also not be granted ownership of a home but given a “life interest” meaning they can live there until death.
The succession law in Spain could also be completely unsuitable for your needs, especially if you have step-children from other marriages or other family members you would like to benefit or indeed charities or other organisations.
One aspect of the new EU-wide succession laws, known as Brussels IV, which is potentially beneficial and a good reason for you to review your Will, is the option to “opt-out” of local law. Under this clause, individuals can opt-out of the local law, by clearly stating in their Will that they have chosen the law of their nationality as the applicable law.
The use of the opt-out clause could be beneficial to property owners in Europe who, until now, may have been caught by so-called “forced heirship” rules forcing them to leave property to children. Instead, a property owner can now make their own decision as to whom the property is left.
Another hotspot for expatriates is the United Arab Emirates. Here too, people need to be aware of succession rules.
The Dubai Courts have recently introduced legislation where, if an expatriate registers a foreign Will with it, this will be used after death. However, in cases where this hasn’t happened, the consequences can be catastrophic for family members.
During the probate period – which can take years in the UAE – assets of the deceased held locally are usually frozen. Also, if there is no Will registered locally, the assets may be split according to local laws – meaning the majority of the assets may be passed to the closest living relative and bypass any children or spouse.
The complexity and ambiguity around Wills is one of the main reasons we strongly recommend expatriates use offshore banking facilities to manage their wealth.
To find out about the many benefits of using offshore banking – download our free guide below.