International estate planning can be incredibly complex. Factors such as dual citizenship, domiciliary status, the location of the property, and where the individual resides all become very important when planning for your estate. Many U.S. citizens own property or other assets somewhere in the United Kingdom, or vice-versa.
It may be tempting to think that you can simply draft two wills – one will for each country, where each will addresses the assets in that country. Unfortunately, there may be ramifications of foreign ownership and inheritance laws in both the U.S. and the U.K. that need to be taken into consideration. Without proper planning, there may be instances in which one will may override or invalidate another.
The following recommendations can help you to minimize the chance that your United States and United Kingdom wills do not invalidate one another.
Strategies When Using Multiple Wills
Creating individual wills in different countries is one way to handle international estate planning, but it can get complex quickly. Each will must be drafted very carefully; otherwise, one last will and testament may revoke the other. If two wills are required, it is crucial that you use two estate planning attorneys – one in the U.K. and one in the U.S. who can work together to coordinate the language included in each will. Each will should also be limited only to the property within that country to further prevent the chances that one will is able to invalidate the other.
Alternatively, a supplemental will could be used to cover the property located in the other jurisdiction. If you reside in the U.S., the supplemental will could be used to address property in the U.K. and vice versa. Supplemental wills serve as a foreign codicil to the primary domestic will and should only be used to address immovable assets located in the foreign country, such as real estate. In these instances, each will must use language that supports the other will, rather than anything that could revoke either will’s validity. Each will should also make reference to the other to avoid any confusion.
Strategies When Using An International Will
One way to account for assets located in both the U.S. and the U.K. is to draft an international will. This option can be far better than using multiple wills, especially if those wills were not properly coordinated and introduce the risk of invalidating one another.
In 1973, the International Institute for the Unification of Private Law held a convention in Washington, DC, to unify certain international laws on the form and standard for an international will to make estate planning with international implications more straightforward and without risk of revoking the will with local sovereignties. Currently, the United States and the United Kingdom are among the countries that allow for international wills. However, in the US, the local state in which the will was drafted must have also enacted the Washington Convention for it to be valid. California is a jurisdiction that has enacted the Washington Convention.
If the individual resides in a state that allows for international wills, there are still other requirements that must be met for the international will to be valid, such as:
- The will must only be the disposition of one individual; joint wills are not allowed.
- The will must be in writing, although it can be in any language and it can be handwritten or typed.
- It must be signed by two witnesses and an “authorized individual”
- All signatures must be entered at the end of the will. If it consists of multiple pages, each page must be numbered and signed by the testator on each page.
- If the individual is unable to sign their will, the reason must be made explicit in the body of the will.
- A certificate must be attached at the end of the international will attesting that the requirements and procedures for creating and executing the will have all been met. This certificate must be signed by an “authorized individual.”
There are also other formatting and signature requirements, but the content requirements include only those listed above.
What Happens If Property Is Not Addressed In Any Will?
Problems can arise when a foreign property is not addressed in either will, which is a common scenario when the property is purchased after the execution of the will(s). If one or both wills are not updated to include the property, intestacy rules will then apply for the property, which could be in direct conflict with the desires of the client.
If the property is located in the U.K., the inheritance laws of England dictate that if the individual was married, the surviving spouse, or civil partner will receive all assets including real property up to the first 270,000 Euros of the estate. The remaining portion of the estate would be half would be distributed to any surviving children equally. If there are no children, the surviving spouse or civil partner will receive the first half of the remainder.
Tax Concerns With U.S. & U.K. Wills
One common concern with foreign property is the threat of double taxation. In many countries, when the foreign property is transferred, the U.S. estate tax will apply, but the taxation rules of the other country may also be levied. The U.S. has many estate tax treaties with countries around the world, including the United Kingdom. These treaties allow the country in which the property is located to tax that property. If both the domiciliary country and the non-domiciliary country want to tax the estate, the treaties provide a formula for determining an estate tax credit so that the property is not taxed twice.
Owning property in both the U.S. and the U.K. provides an opportunity to leave your beneficiaries with a diverse estate. But international estate planning incorporates a lot of elements, which must all be considered in order to draft enforceable wills. It is always best to consult with an experienced international estate planner who can work with you to ensure your entire estate across both countries is included, and any wills used in the plan are enforceable.
