If you are dealing with the estate of a loved one who was a UK resident with assets abroad, or a foreign national with UK assets, it is important to follow the correct processes in all jurisdictions. It is becoming increasingly common for people to own assets outside of the UK. Many people have holiday homes abroad and also bank accounts/investments.
In the UK, after someone has died there is a legal process undertaken to administer the estate. This includes collecting information about the assets owned by the person who has passed away, paying any inheritance tax and other debts that may be due and to then call in and distribute the remaining assets to the beneficiaries of the estate. This process is referred to as Probate, and it is undertaken by the Executor when there is a will, or the Administrator when there is no will. The probate process has varying stages, but the most important document is the Grant of Probate/Letters of Administration issued by the Probate Registry, which is a UK court. It is this document that will be required if the deceased left assets in the UK.
When dealing with estates where there is a foreign element, the process to collect assets does vary significantly depending upon a variety of factors. It is necessary to establish the domicile of the person who has died, the country in which they died and to determine whether any formal legal process has been undertaken in that country. International probate happens when the deceased lived in one country but owned assets elsewhere. This applies to:
· Foreign nationals who owned assets in the UK;
· UK nationals who owned assets abroad;
· Ex-pats who still have assets in the UK;
· People living in the UK whose official home for tax purposes is abroad (non- domiciled residents).
Where a person dies owning assets in two or more countries, it is frequently necessary for probate or the equivalent document, to be obtained in both or all countries where the assets are situated. For example, if a person dies domiciled in Holland holding assets in both England and Holland, it will be necessary to go through two separate procedures to release the assets. In Holland, the beneficiaries of the Dutch estate will need to obtain a Certificate of Inheritance to enable the Dutch assets to be released. A separate Grant of Probate, or Letters of Administration if there is no Will, will need to be obtained in England to secure the release or transfer of the English assets
The liability for inheritance tax in the UK is dependant on the domicile of the person who has died. Generally, a person’s domicile is where they have their permanent home. Every person can only have one permanent home at any given time. HMRC will take various factors into account when deciding on a person’s domicile, including residence, business interests, family and social interests, ownership of property as well as any will and power of attorney.
Any person who is UK domiciled will be liable for inheritance tax on worldwide assets. Any person who is not UK domiciled will only be liable for inheritance tax on UK assets
Even if you are not domiciled in the UK under general law, HMRC will treat you as domiciled in the UK for inheritance tax (“IHT”) if at the date of your death:
You were domiciled in the UK within the three years immediately before death, or
You were resident in the UK for income tax purposes for at least 15 out of the last 20 years ending with the year in which you died.
The different processes, legal requirements and tax obligations vary to a huge extent in every country and can mean that executors are required to go to huge time and expense to get the estate dealt with.
If the person who has died was resident in a former commonwealth country recognised by the UK’s Colonial Probates Act, then an application can be made to “reseal” the grant of representation obtained in that country. This involves an application being made to the UK court to reseal the overseas grant of representation and the will. Countries recognised by the Colonial Probates Act include New Zealand, Canada, Australia, Hong Kong, Singapore, South Africa, St, Lucia, Jamaica and the Bahamas. This means that a separate application for a UK grant is not required and it is a significantly faster process.
Personal Wills and Probate can assist with all aspects of cross-border probate administration. We would be delighted to assist you with any queries that you may have.