It is important when estate planning and structuring your will to be aware of the numerous issues that can affect succession and tax, particularly with international asset holdings or wills. Therefore, it is important to take expert advice when preparing or reviewing your estate or will to ensure that your plans are not only legally compliant, but also distributed as you originally intended.
Typically, the more wealth accumulated by a person or family group, the stronger the likelihood that the holding of assets will be in more complex structures, often involving structures in more than one jurisdiction.
Various factors can influence jurisdictional asset holdings and interests, including:
- Taxation considerations (direct taxes, such as income and capital gains taxes, inheritance and estate taxes);
- The concept of forced heirship in some overseas jurisdictions on one’s ability or inability to transfer assets to intended beneficiaries;
- Inheritance (or testator’s family maintenance) laws which can impede upon one’s freedom on testamentary capacity in various jurisdictions, including Australia;
- Asset protection considerations including trust recognition (or lack of) in some overseas jurisdictions;
- Family law property considerations and jurisdictional reach;
- Bankruptcy legislation;
- Visa restrictions or rights of employment in various jurisdictions;
- Taxation treaties.
In addition to these factors, one might simply choose to hold assets in various jurisdictions so as to spread investment risk across a number of locations.
Estate planning may often involve becoming domiciled or a tax resident in one jurisdiction and seeking to avoid residence and domicile in another. In some jurisdictions, citizenship is solely determinative of various legal obligations, which cannot be avoided without renunciation of such citizenship.
The use of trusts across various jurisdictions can be useful regardless of a particular individual’s own place of residence.
When completing your estate planning, it is extremely important to give consideration to numerous issues that can affect freedom of succession and taxation consequences, expert advice can ensure that your plans are not only legally compliant, but also able to be given intended effect.
Some common issues tax issues that can arise in relation to deceased estates include:
- Where a deceased person has changed their country of residence or domicile;
- Where a deceased’s executor is a foreign resident or where the executor is resident in a different country to a deceased for tax purposes;
- Any beneficiary of a deceased estate is resident in a foreign jurisdiction.
These issues require careful consideration and thorough planning often in conjunction with experts in relevant jurisdictions. A failure to properly identify relevant issues can result in missed taxation planning opportunities and tax burdens that might have otherwise been avoided or reduced.
If you require any assistance with your estate planning please contact us on (+61) 02 4961 0002 to be connected with our local experts.
This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.