When we speak with a new client, we always ask about their long-term succession & estate planning.
It’s a complex area and in this article, we summarise why it should be a priority for every expat.
It might not seem the obvious line of discussion when you are speaking with us about your financial planning and investment advice needs, but estate planning can be important and impactful. When we are asking about this, we are asking you to clarify whether you have made contingencies for what happens to your assets when you die, or if you become incapacitated to such a degree that you can’t make decisions for yourself.
This includes wills, powers of attorney and other structures (trusts, companies, foundations). To be clear, we do not give this legal advice. You will typically need to speak with a notary to have the appropriate documents put in place.
Estate planning is important because it can impact how you invest, where you invest, and what happens to your investments and other assets.
Wills: We always recommend that clients make sure they a will that is in place and up to date. It should be relevant for your current country of residence, as well as your country of citizenship, plus potentially any other countries where you hold assets or may be considered a tax resident.
A will sets out what you want to happen to your assets when you die. Where and how you want your assets distributed, in what proportions and any restrictions. It can also set out in which jurisdiction your assets should be distributed.
Power of Attorney: A Power of Attorney is often done at the same time as your will. It is a separate document that directs how your assets can be managed, and who can make decisions on your behalf if you are incapacitated. In some countries, you will need to specify that it is an enduring Power of Attorney so that it will continue to apply if you become mentally incapacitated.
Are you a cross-border person?
A recent ruling by the European Court of Justice has emphasised the importance of succession planning and the single law applicable to it. In this case that included cross border assets, there was a dispute over which European country should determine the distribution of their assets.
The geographical location of assets, beneficiaries, inheritors or other family members and relatives of the deceased, and the deceased’s nationality must all be taken into consideration. The European regulation on cross-border successions states that the procedures should be initiated by the member state to which the deceased has closest ties. Unless the habitual residence of the deceased is established, it is not possible to determine whether a succession is domestic or a cross-border one.
So, you can see why estate planning and succession planning is important.
When we provide financial and investment advice, we always consider your country of residence, your citizenship and any other countries where you might have a tax obligation. If you have your estate planning in place, we can also factor this into our recommendations.
Good investment and financial advice that takes your estate and succession planning into consideration, can not only help you to achieve your goals, but also facilitate the smooth transition of assets to your beneficiaries, and therefore meeting your family’s needs as well.