29 November 2021 - Podcast
The world has become an increasingly smaller place and people are more mobile. As a result, it is not unusual for there to be a foreign aspect to an individual’s will planning. This may be a UK resident and domiciled individual who owns a holiday property abroad. It may be an individual
who is domiciled outside of the UK with overseas property but living in the UK for a (sometimes considerable) period of time.
It is common practice to have a single English form Will dealing with worldwide property. Often that will be acceptable provided the position on death has been carefully considered. Where the asset is a property abroad, the appointed executor may need authority that complies with the relevant jurisdiction in order to deal with it. This can involve a translation of the Will and grant of probate. Usually the documents will need to be notarised and apostilled in England before the foreign authorities will accept the executor’s instructions.
Probate may be more straightforward if the English form will applies to worldwide assets except the relevant jurisdiction and there is a separate Will dealing with assets in that jurisdiction which can be proved independently.
An area of difficulty arises if the individual is domiciled in a country that recognises rights of heirs and which limits testamentary freedom. Many European countries provide for a share of an individual’s assets to pass to the surviving spouse and children leaving the remaining share to be
governed by the individual’s will. This is where complicated conflicts of law issues come in to play. It may be possible to elect that the law of nationality or residence applies to the succession of an overseas property, which can avoid many of the difficulties.
Such succession laws can also affect the amount of tax payable. If an individual living in the UK claims to be domiciled elsewhere then HMRC would expect that jurisdiction’s succession rules to apply to the transfer of assets on death. If the non-domiciled individual has left his UK assets to his surviving spouse so that there is no UK inheritance tax on the first death, HMRC may enquire whether that is permissible under the succession laws of that individual’s domicile. If a proportion should have been left to the individual’s children and that proportion exceeds the available nil rate band, HMRC may seek to apply UK tax.
It may be possible to anticipate some of these issues through having a separate Will in the relevant jurisdiction, which can usually be in an English form. This will, in practice, mean that the procedure on death will be much more straightforward and any issues such as rights of heirs
can be addressed. In many cases, the problems created by having a single will are not insurmountable but careful thought can ensure that any difficulties are minimised and unexpected surprises are avoided.
Lasting Powers of Attorney – time for a reappraisal?
It is just over four years since, to the dismay of many, Enduring Powers of Attorney (‘EPA’) were replaced by Lasting Powers of Attorney (‘LPA’). Since 1 October 2007, it has been possible to create both a Property and Affairs LPA (which relates to an individual’s financial affairs and so
is similar in scope to an EPA) and a Personal Welfare LPA (relating to an individual’s health and welfare). It is fair to say that LPAs were viewed with great suspicion to start with, primarily due to their quite considerable length (they were on average 30 pages long) and perceived
associated cost and as such many people chose not to sign a LPA when making a will.
However, the Office of the Public Guardian did listen to concerns about LPAs and introduced a new streamlined version of the form. Individuals have become more familiar with them and the new role of certificate provider has proved relatively straightforward to fulfil. This means that an LPA need not be expensive nor complicated and should form an integral part of an estate plan as an EPA did previously.
An LPA should be considered when looking at estate planning. With medical advances, people are living longer which has led to an increase in people who are mentally incapable of managing their own affairs, be it through illness, accident or simple longevity. A normal power of
attorney is revoked automatically by the loss of mental capacity and although it is possible for the Court of Protection to appoint someone to manage their affairs, this can be a time consuming and infl exible process. By putting an LPA into place now, an individual will have the right to choose who will act on their behalf, so as to ensure that the most appropriate person is the one who has responsibility for them.
LPAs are much more flexible than EPAs and enable the appointment of a combination of attorneys who can then act in relation to certain aspects of an individual’s affairs, be it together or together and separately. This means that it is possible to ensure that the right people (say, in the case of a business) are given the right powers, whilst not having any more powers than they need. It is possible to include
restrictions on when an LPA can be used (one can specify that a Property and Affairs LPA can only be used when capacity has been lost) and to tailor it exactly to specific requirements.