The laws on how your assets are treated when you die vary greatly by country.
As an expat, you might need to consider the rules in your country of origin, your host country, and any other countries where you hold assets.
It’s easy to assume that it will be similar to your home country, but it rarely is.
Examples being:
- In France & Spain, much of your estate will be given to your children, regardless of your will.
- Shariah law in the Middle East, means women don’t automatically inherit.
- Joint accounts are frozen on death in many countries.
Many expats assume their assets will simply be dealt with in line with the wishes made out in their will.
But bank accounts, pensions, and life insurance, may be treated differently.
Equally some countries may not recognise an overseas will for certain assets like real estate.
To increase the complexity, the rules determining this are based on the country where your assets are held, not where you’re from or where you live.
Will your joint bank account be frozen?
It’s easy to forget how vital your bank account is for day to day life… until you can’t access it.
If something happens to you overseas, your family still need access to cash to pay the bills.
And how joint bank accounts are treated varies widely across jurisdictions.
Survivorship Rights?
In places like the UK and popular offshore locations like Jersey & the Isle of Man, joint accounts usually come with survivorship rights.
This means that the funds will automatically pass to the surviving account holder.
This doesn’t just cover bank accounts, but also often investment accounts.
You might need to watch out for this, if you were planning for any funds to be passed on to someone else.
No Survivorship Rights?
In many other countries in Europe, Asia and The Middle East, joint accounts don’t have survivorship rights.
They are frozen on death, debit cards are cancelled, direct debits are suspended.
And the funds need to go through probate, which could take months.
So it’s vital to understand how you could be affected.
Depending on whether your will is recognised, or any forced-heirship laws exists, depends on where there assets will be distributed.
So it’s often simpler to only use local accounts for day to day expenditure and receiving your salary.
And to hold the majority of your funds offshore, in an account with survivorship rights.
What other assets generally aren’t covered by your will?
Life Insurance
If you have a life insurance policy, you will have nominated beneficiaries when the policy was set up.
On your death, funds will be automatically paid out without the need to go through local probate.
This can provide an easily solution, to make sure assets are available for you family to deal with things like Inheritance Tax.
But it’s important to remember, whilst the funds won’t need to go through probate, if they’re not held in a recognised trust, you may still owe inheritance taxes or estate duties on the proceeds.
Pensions
Like life insurance, you can nominated beneficiaries for your Defined Contribution Pensions (like a SIPP or QROPS).
Most pension providers have an Expression of Wishes form, which the pension trustee will use to guide their decision on how to distribute your assets when you die.
For Final Salary pensions, these will usually only provide benefits to your spouse, or dependent children, and you can’t leave them to others as you wish.
What about everything else?
Usually everything else will be dealt with inline with your will.
But it’s important to know if this will be recognised, and you may need more than one will.
It’s common in popular offshore investment jurisdictions to recognise overseas wills, which can make things simpler – especially if you hold the majority of your assets offshore.
But for other countries, it’s not always so straightforwards.
For example, real estate often needs other be covered by a specific will drawn up in the country where it is held.
For liquid assets a will from your home country may, or may not, be recognised in the country where you live.
So it’s prudent to have a will for your home country, a will for your host country, and to seek local advice.
If you found this useful, you might like our free 13 Step Financial Checklist for British expats living overseas.
Or if you’re looking for professional help with your life insurance, pensions & investments – click here to book your free initial consultation.
