The guidance of an estate planner when a person is planning his Will is crucial if he owns overseas properties. There are a host of issues that can crop up that may make it difficult or more costly for loved ones to receive what the deceased intended them to have in the event of his death. These need to be clearly and concisely addressed in his Will.
The biggest question that has to be answered is should the person write a single Will in his home country to cover all the properties he owns, both in his home country and abroad, or should he write more than one Will to specifically cover properties in both local and foreign jurisdictions? There is no one-size-fits-all solution. If a person can afford legal representation in the foreign jurisdictions where he owns property, then writing different Wills for different jurisdictions might make more sense to him.
Wealthier people with multiple foreign properties will likely go for multiple Wills. However, caution needs to be accorded as Wills that are signed later can unintentionally revoke the ones which were signed earlier. This problem disappears where there is only a single Will. The important thing is to ensure every Will that is drawn only revokes previous Wills to the extent that they apply in the jurisdiction relevant to a particular foreign property.
Inheritance laws may bite back
Another key issue is that laws governing the administration of Wills are not uniform across the world. For example, common law jurisdictions such Singapore, Malaysia, Australia and England are relatively straightforward and easy to understand for people who are writing their Wills. However, civil law jurisdictions in other countries like Europe may present inheritance tax problems.
For example, a Singaporean businessman owns a property in Italy, which he intends to pass on to his wife when he dies. He decided not to write a Will in Italy to cover this property but instead includes it in his Singapore Will that covers all his overseas properties. When he passes away, there is a good chance that his Italian property may be shared among his extended family members that he didn’t intend to give anything to.
This is because, in the absence of an Italian Will, the local intestacy laws automatically ensure that an inheritance is divided among surviving family members. The person could have avoided this problem by writing an Italian Will, identifying his wife as the sole beneficiary of the property. He should engage a lawyer in Italy to stay on top of legal matters that are tied to his property.
Meanwhile, estate taxes may also apply in some jurisdictions. For example, if a person decides to leave a U.S. property to his loved ones, he should be aware that the U.S. imposes an estate tax. His loved ones will be responsible for paying this tax and may have sell the property to do so. This may be avoided or tax minimized with some bespoke estate and trust planning (we will put our focus on Trusts in upcoming articles).
In summary, whatever approach is taken when deciding on the distribution of foreign properties postdeath, a person’s goal must be to minimise difficulties for his loved ones and ensure the efficient and faithful distribution of overseas property assets. Do not underestimate the importance of having a properly drafted Will or Wills. It won’t only be your interests that are protected but also those of your loved ones.