Estate Planning | Prestovia Trust

[5-min read] Cross Border Estates: What Happens to Your Global Assets After Death?

Prestovia Trust — Tue, 23 May 2023 09:54:45 +0000

Cross Border Estates: What Happens to Your Global Assets After Death?

When it comes to managing our finances, it’s essential to consider the potential implications of our assets after we pass away. For those who hold assets around the world, the implications can be even more complex. This is where cross-border estates come into play, and it’s crucial to understand what they are and what they mean.

In this blog post, we’ll delve into the topic of cross-border estates and how they can impact your assets after your death.

What are cross-border estates?

A cross-border estate is one where the deceased has assets located in different countries. It could be a bank account, real estate property, shares, or any other asset that has value. These estates are becoming more common as people are increasingly investing and owning assets across the globe.

The complexity of cross-border estates arises due to the differences in legal systems and tax laws across different countries. For instance, if you have a property in the UK and another in the US, your beneficiaries may have to go through two separate legal processes to inherit these assets.

What happens to your cross-border estate after you die?

When you pass away, your estate goes through a legal process called probate. This process is different for every country, and it can be complicated when you have assets in different jurisdictions.

The probate process involves validating your will, identifying your assets, and distributing them to your beneficiaries. If you have assets in multiple countries, your estate may need to go through probate in each of those countries. This can be time-consuming and expensive, and it’s essential to plan ahead to avoid complications.

Why is Planning Important?

Cross-border estates can be particularly challenging because of the differing laws and regulations in each country. For example, inheritance laws can vary greatly from one country to another. Without proper planning, your loved ones could face a number of difficulties in trying to navigate the complexities of cross-border estates.

One key aspect of planning for a cross-border estate is understanding the concept of domicile. Domicile refers to the country in which a person is considered to have their permanent home. It is important to establish your domicile for estate planning purposes, as this will determine which country’s laws apply to your estate.

Another important aspect of planning for a cross-border estate is understanding the concept of forced heirship. Some countries have laws in place that require a certain portion of a person’s estate to be distributed to their heirs, regardless of what is stated in their will. This can be a particularly important consideration for those with assets in countries with forced heirship laws.

How can you plan for your cross-border estate?

Planning ahead can save your beneficiaries time, money, and stress. Here are some steps to consider:

Create a will: Your will should clearly state your wishes regarding your assets and who you want to inherit them.
Seek legal advice: You should consult with an experienced estate planning attorney who can help you understand the legal and tax implications of your cross-border assets.
Consider setting up a trust: A trust can help you avoid the probate process and ensure that your assets are distributed according to your wishes.
Keep your documents up to date: Make sure your beneficiaries know where to find your will and other important documents, such as deeds, titles, and account statements.

Estate Planning Strategies:

There are a number of estate planning strategies that can be used to help mitigate the challenges of cross-border estates. One important strategy is to work with a team of attorneys, accountants, and financial advisors who can help you navigate the complex legal and tax implications of cross-border estates.

Another strategy is to create a comprehensive estate plan that takes into account the differing laws and regulations of each country in which you hold assets. This may include establishing trusts or other legal structures that can help to protect your assets and ensure that they are distributed according to your wishes.

It is also important to review and update your estate plan regularly to ensure that it remains up-to-date and reflects any changes in your personal circumstances or in the laws and regulations of the countries in which you hold assets.

Conclusion

In conclusion, cross-border estates can present a number of challenges for those who hold assets in multiple countries. However, with proper planning and the assistance of a team of experienced advisors, it is possible to navigate these challenges and ensure that your assets are distributed according to your wishes. At Prestovia Trust, we are committed to helping our clients plan for their cross-border estates and achieve peace of mind knowing that their assets are protected.

[3-min read] Why succession planning is important & where to start

Prestovia Trust — Tue, 15 Nov 2022 06:17:01 +0000

Succession planning is a vital component of wealth management to maximise the transfer of wealth through generations, regardless of your faith or country of domicile. However the location of your assets, country of domicile, your faith and wishes all play a determining factor in how your wealth is transferred after you pass away. Adequate succession planning with a qualified professional is crucial to ensure that you understand how your wealth can legally be transferred and what measures you can take now to ensure that this is done in line with your wishes.

Within the Islamic faith, succession principles are generally based on Sharia Law, the principles of which are explained below.

Basic Islamic succession planning principles

Simply put, these are similar across the GCC region with some variation in certain jurisdictions. There is a system of forced heirship with males assuming a more favourable position under Sharia Inheritance principles. The most obvious example being that sons inherit twice the share of daughters and there is a diminished share for female spouses. Although there is limited testamentary freedom, one third of an estate can be given away in a written Will although there are rules around who this can be bequeathed without permission from other heirs.

Within Sharia Law, results vary depending on family structure, regional and religious adaptations.

Lifetime gifts (hiba) are permitted, while these gifts could be within your values and Sharia Law, however, if you are from the UK and you are used to common law, it could be useful to set up an appropriate structure. Here is why:

Mohamed dies with assets in the UAE. He has no will. He is survived by his lifelong sweetheart – his wife, two sons and two lovely daughters. He also has a surviving brother. How would this play out according to Sharia Law? His wife would receive ⅛ of his estate (12.5%). His children; sons would receive 7/12 (58.33%) and his daughters would receive 7/24 or 29.17%. His brother would receive nothing.

This may or may not be the result Mohamed would most likely have wished for.

When considering succession planning, where should you begin?

Understanding how your assets will be distributed and reviewing whether this is in line with your wishes.

A Will is always the basic necessity of succession planning. In the UAE there has been recent media reporting that Wills from your home country are set to be recognised for expatriates or non-Emiratis, but this is not, as yet, considered standard practice.

Therefore our advice if you are a non-muslim is that you should still review your need for either a DIFC Will or ADJD Will (Abu Dhabi Judicial Department) and if you have children to include the necessary guardianship arrangements.

Gifting during lifetime is also a great solution for obtaining your wishes in regards to succession planning. The use of a Foundation, or Trust, offers a way to structure your assets whilst still retaining control during your lifetime.

Another key consideration which is often overlooked with regards to succession planning is ensuring the right level of life insurance coverage. A life insurance policy can be paid offshore on death to provide liquidity outside of the Will and before probate is granted.

You live in the UAE; do you need to worry about tax?

You should take into account tax planning, for example if you are domiciled in the UK, your worldwide estate would be subject to UK inheritance tax. Other jurisdictions have other tax issues that need to be reviewed. We strongly advise sitting with a qualified professional to ensure that you understand your current inheritance tax position and understand what if any measures can be taken to help structure this more effectively.

How can advice help for succession planning?

Estate planning can be complex. Drafting a Will is not an easy feat – you may have assets in different locations and multiple jurisdictions. Perhaps your wife is a different nationality to you, or you may have been married previously and not to mention that division of assets can often cause family feuds. All this, before you even approach tax, religious or domicile, residence and/or citizenship considerations.

Prestovia Trust remains at your disposal. We are well placed to discuss your personal situation and provide guidance in formulating the best and most advantageous succession plan for you. Please get in touch if you would like a free review of your current circumstances.