Buying Abroad
This article appeared in the May 2006 Issue of Homeplus.
ESCAPE TO THE SUN….WITH PEACE OF MIND!
Summer may be just around the corner however all throughout the year, many of us long for sunnier climes…Here Elspeth Talbot, Partner with leading Private Client Solicitors Bird Semple, considers the implications of a second home abroad;
Did you enjoy the May Bank holiday? The weather was a bit mixed, very hot and sunny one day but wet the next (some would say a typical holiday weekend in the West Coast of Scotland). No wonder then that so many of us are investing in property overseas; not only is the weather more likely to be favourable, but the costs of ownership abroad are less than in the UK.
TV programmes such as Channel 4’s `A Place in the Sun’ with presenter Amanda Lamb have increased interest in owning a property abroad. Cheap flights courtesy of EasyJet, RyanAir and a growing band of operators have opened up a whole vista of European and American destinations. Michael Ball, author of the European Housing Review, says “The trend for second homes is likely to grow in the long-term because of cheap flights and lower living costs abroad.” (Source-The Royal Institution of Chartered Surveyors’ European Housing Review, April 2005).
The link between a holiday home abroad and the writing of a Will in Scotland is perhaps not obvious at first sight. When I ask about a client’s holiday plans, I am not simply showing interest in the client; I am also finding out about assets which they may otherwise think bear no relation to their Scottish Will. The physical location of an asset is important for several reasons:-
- The laws of succession vary from country to country. Although in Scotland a person is free to dispose of his assets in any way he pleases, subject only to the legal right of his spouse and children to share in part of his moveable estate, he may not be so free in other countries. In France, for example, there is a law of “forced heirship” where there is a set of rules about who can inherit what.
- The administration of the asset on the death of the owner will also vary from country to country. In Scotland, Confirmation of the executors is required before an asset can be sold or transferred to a beneficiary, but this may not be sufficient for other countries and further local procedures may be required.
- An inheritance tax or other similar type of tax may be payable abroad, in addition to the asset being subject to inheritance tax in the UK (although there may be a double tax treaty in effect which will offset one tax against the other).
If you have a holiday house – or other asset – abroad, it may be important for you to speak to a local solicitor and to draw up a foreign Will. Generally speaking, “heritage” (ie land and buildings) is dealt with by the law of the place where it is situated; an apartment in Spain therefore will be subject to Spanish succession laws. A foreign Will is necessary. Conversely, “moveable” assets such as a bank account or shares are generally dealt with by the law of the land with which the owner is most closely connected (normally where they live). A foreign Will is not usually necessary for these assets. For example, a bank account established abroad to pay for charges in connection with the house is foreign estate; but if you live in Scotland, your Scottish Will is likely to be sufficient to deal with the account.
Even if you have taken local advice and drawn up a Will abroad, you still have to be careful when making or updating your Will in Scotland. It is normal practice for Scottish Wills to include a clause revoking all previous Wills (to avoid doubt about which Will is valid at the time of death). However, if this revocation clause is not restricted in some way, such as by excluding any Will made in the foreign country, then the foreign Will may be rendered invalid.
With careful planning, the pitfalls of foreign ownership can be avoided, leaving you free to enjoy the sunshine!
If you have any questions about Wills and foreign assets, please seek specialist legal advice.
Article complied by Elspeth Talbot
Posted by Sharon Clift on Mar 16, 2006
