Published on: 23rd April 2018

A possible consequence of owning property abroad

If you live (are domiciled) in England/Wales you have testamentary freedom. This means that you can create a Will leaving what you want to whom you want. There are many countries where this is not the case. In such countries there is partial or total "forced heirship". Forced heirship means that you must provide for certain (categories of) people.

If you live in England/Wales and you own property (i.e. buildings/land) in a forced heirship country then there can be some unintended consequences waiting to catch you out. If you are married, live in England/Wales, all of your assets are situated in England/Wales and you "leave everything to each other", when the first of you dies there is no inheritance tax to pay because spouses can pass assets between each other in life and by Will without incurring any inheritance tax liability. Inheritance tax may well be due when the second of a married couple dies. But if you own property in a "forced heirship" country you may be "forced" by the laws of that country to pass assets to children.

If you live in England/Wales then HMRC will look at the value of your worldwide estate when you pass away. That means that if you own property/land in a country with forced heirship rules and sufficient value of assets pass to your children because of the "forced heirship" laws of that country you may find that you have to pay Inheritance Tax in the UK when the first of a married couple dies.

If you live (are domiciled) in England and Wales and own buildings/land in a country that has "forced heirship" laws of succession then you may need specialist advice. If you would like to meet with one of our Consultants to discuss any of the issues raised here or any other Estate Planning topics please telephone 01732 868190 or click here.

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