InternationalPropertyWill WritingWills and Second Homes Abroad – Make Sure Your Will is Fit for Purpose

29th March 2022

If you own assets abroad such as second home, it is vital that you re-look at your Will – obtaining expert advice from your Will writer and Estate Advisor.

You need to be aware that your UK Will, made under English Law, does not necessarily guarantee that your overseas property is passed to your intended beneficiaries in the event of your death. As with all life changing circumstances and new property purchases, it’s vital that you re-visit your Will to ensure that your overseas estate goes directly to the person you wish to inherit.

If you purchase a holiday home, in an overseas EU country, the ‘EU Succession Regulation,’ which came in in 2015, will apply the Succession Laws (often known as Forced Heirs Rules) to your overseas estate. The ‘EU Succession Regulation’ is binding in 25 EU countries, to include the most popular second home destinations of France, Spain and Portugal. Presently, Ireland and Demark are not included.

Put simply, it means that the inheritance laws of the country where your second home is located, may come into play in the event of your death. This is particularly the case if that country was where you were habitually resident at the time of your death. In some circumstances, if it can be proved that your main residence is the UK, they might allow English Law to be applied. However, as with all finances, it isn’t worth leaving anything to chance, therefore getting the correct Will content / wording is vital.

Should the country, where your second home is located, apply the local succession rules it might well be the case that they decide who should inherit your overseas home. In many EU countries such as France, Spain and Portugal, children – rather than spouses, tend to take priority where inheritance is concerned. This has the potential to create huge, costly and protracted family issues if you haven’t amended your Will accordingly.

The ‘EU Succession Regulation’ has a ‘Choice of Law’ clause, giving you the option of expressly choosing the law of your nationality when making a Will. This ensures that, if you are a UK citizen, the English laws are applied to your estate thus giving you the freedom to leave your overseas property to whomever you choose. More often than not, this is usually your surviving spouse. If your spouse isn’t the mother of your children, the property could be placed within a Living Trust, just as with a UK property, allowing your spouse to enjoy and reside in it during her / his lifetime – and for it then to be passed onto your children.

The other thing that you need to consider is that just because your property is overseas, you’re not beyond the reach of our beloved ‘HMRC!’ Should you sell, you might still be liable for capital gains tax as well as income tax on any earnings – should you have rented it out. Furthermore, the property will still play a role in determining the amount of Inheritance Tax payable on your estate after your gone! All the more reason to get your estate plan and Will in order.
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Wills and Second Homes Abroad – Make Sure Your Will is Fit for Purpose

Wills and Second Homes Abroad – Make Sure Your Will is Fit for Purpose