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For certain expats, the creation of a Will is one of the most important components in wealth and estate planning. This blog will explore why having a Will in place is of increased importance, due to the vast differences in inheritance and succession laws in various countries.
A Will is a legal document which outlines the desired destination for your assets upon your death. Not only this, but it also allows you to appoint guardians for your children if they are left without a parent. Dying without having a legally valid Will in place is known as dying ‘intestate’. When this occurs, the distribution of the deceased’s assets and custody of their dependents, depending on their location, are likely decided by a probate court.
Because of this, the eventual distribution of your assets is unlikely to be in line with your wishes. This can often lead to arguments and confusion within your family.
Whilst you are alive, you can amend your Will as many times as you’d like, to redirect your estate to your beneficiaries.
As an expat, the importance of having a Will in place is compounded. Depending on where you are resident and more importantly, where you die, your estate may be distributed as per the law of the land.
Many expats have a Will written in their country of origin. However, unfortunately, in many cases, a Will that has been written in a persons home country will not be valid overseas. As such, expats must ensure they have a Will in place which is legally valid in both their home nation and country of residence to fully protect their assets.
A large number of deVere’s clients are resident in countries which are governed by Sharia Law. A prime example of this is the United Arab Emirates (UAE). When an expat is resident and dies in the UAE, their estate will likely be distributed as per Sharia Law. This will often mean that a person’s assets and even the guardianship of their children is decided by Sharia Law.
There are a number of stories where families have faced estate distribution difficulties following a death in the absence of a Sharia-Compliant Will.
Common problems include:
Many couples hold joint bank accounts in the UAE. As these form part of the estate of the deceased, these can often be frozen, until they go through probate.
If a families residency is dependent on the employment of one family member, death can lead to cancellation.
Sharia Law will often pass the bulk of a person’s assets to the next male in line in the family. This can often be a brother or father.
In certain cases, family members of the deceased have been unable to travel until the probate process has been completed.
Non-Muslims who are resident in many countries which are subject to Sharia law can create what’s known as a Sharia-non-compliant Will which is designed to ensure Sharia Law will not apply to your assets and your dependents upon your death.
Succession laws differ from country to country and how they will apply to your estate depends on the scope of your Will. Whilst some Wills can be valid worldwide, other Wills may only be valid in certain countries and other Wills, will only be valid in one country. With this in mind, it is important that you ascertain the validity of your Will in foreign jurisdictions as failure to check this could lead to difficult legal consequences.
Having a Will in conjunction with other tax-efficient products in place stands to minimise your eventual inheritance tax liability (UK only). If you fail to plan your estate in the most tax-efficient fashion this can lead to your beneficiaries receiving a significantly smaller amount of your estate. Top-level UK Inheritance tax is 40%.
As an expat, having a Will in place should be one of the first steps in the wealth management and estate planning process. Protection in the form of life insurance and critical illness cover are of equal importance and should also be prioritised.
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