As we become an increasingly globalised society, it is becoming more common for people’s Estates to include foreign assets.
If you have assets located overseas, whether it be real property (like a house or land) or personal property (such as bank accounts, vehicles, boats and household items), advice should be sought and careful consideration given to your foreign assets during the estate planning process in order to avoid unforeseen issues arising.
There are several factors which can affect an estate that includes foreign assets, such as citizenship, nationality, residence, and the laws and policies of the country in which the assets are located.
In an attempt to simplify succession law, the Australian Government agreed to the Convention Providing a Uniform Law on the Form of an International Will 1973 (the Convention), which came into force in Australia on 10 March 2015.
The purpose of the Convention was to introduce a new form of Will, known as an ‘International Will’, which is recognised as valid in all countries that are party to the Convention.
One of the main benefits of having an internationally recognised Will is its ability to reduce the likelihood of conflict arising if it is unclear which country’s laws apply to the distribution or administration of a particular asset in your estate.
However, an International Will is subject to various requirements and formalities prescribed by both the Convention and Australian law.
In practice, for an International Will to be valid, it will need to be signed by the Testator (Will maker) in the presence of two independent witnesses, and a third witness who is an ‘authorised person’ such as a lawyer or a notary public.
In addition to witnessing the Will, the authorised witness is required to complete a certificate confirming that the International Will was prepared in accordance with the Convention.
THE FOLLOWING COUNTRIES ARE PRESENTLY PARTIES TO THE CONVENTION
THINGS TO CONSIDER
Although an International Will may be beneficial in certain circumstances, it may not be appropriate if the laws of the other country are significantly different from the laws in Australia, or where there may be interpretation issues due to any language differences. In these circumstances, a more prudent solution may be to have separate Wills prepared in each country.
However, if separate Wills are made, care must be taken to ensure that each Will is properly drafted, and is effective in the country in which it intends to apply.
In this respect, it is paramount that your lawyer in Australia and overseas are aware that there are Wills located in other countries, so that they limit the scope of the Will to that country and do not inadvertently revoke your foreign Wills.
Alternatively, it may be appropriate to consider whether your foreign assets are still relevant to your needs. If retaining the asset is of no great benefit to you, it may be wise to consider disposing of the asset, or transferring the asset to Australia before your passing to avoid complications in the administration of your Estate.
Similarly, if you have foreign citizenship or foreign connections that could impose tax implications on you, then it may be appropriate to consider renouncing the citizenship or foreign connection during your lifetime.
In this regard, you should consult with an industry tax professional or accountant as to whether any tax implications (such as Capital Gains Tax) will apply when disposing of assets overseas or if you intend to distribute assets to a beneficiary that is not a resident of the country where your assets are located.
To discuss your individual estate planning needs or if you require assistance in the administration of an Estate, please do not hesitate to contact us on (07) 5563 8970 or email us at email@example.com