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Estate Planning Will You Have Control and Certainty?
Friday, 05 February 2016

We all sleep better when we feel confident that our affairs are in order, and as we get older we think more about the legacy we will leave to future generations; specifically, how and to whom our assets will pass on our death.

Increasingly, estate planning is a major concern for expatriates.  You have worked hard to build up your wealth and want to pass it on to children and grandchildren to help them as they make their way through life.  You want to ensure the money is used wisely, at the time they need it most.  But how can you have control over what happens after you are gone?  You may have many years left in retirement yourself, and so need to continue to receive income or take capital in the meantime.  

Here are some situations we often come across, which may resonate with you.

You want to leave money to your children but are concerned about how they will handle it at this stage in their life.  Perhaps you also have concerns about whether their marriage will last. You would prefer it if they received their inheritance when they can use the funds to ensure they have a comfortable retirement.   

You want your grandchildren to receive a good education, without being saddled with debt, and would like to contribute to their university fees.  You would like them to have access to a certain amount of capital while they are at university, then receive the balance of their inheritance around the time they are looking to buy their first property.

You may be able to set capital aside now to plan for the above situations, but need to leave other funds available for your and your spouse’s use through your retirement years – however long that is.  So you need to have full ownership of these funds now, with full withdrawal and income rights, but set up in such a way that they can easily pass to your chosen beneficiaries when you die.  Ideally you want certainty of succession without the need for probate.

And then there is the significant issue of tax. As much as possible you would like all of your hard earned wealth to pass to your chosen heirs, rather than a large part going to the taxman.  British expatriates living in Spain have both UK inheritance tax (which is based on domicile, not residence), and Spanish succession tax to contend with.  The two tax regimes work very differently, and you also need to understand how the Spain/UK double tax treaty works in this case.

The solutions you use for your estate planning should therefore be tax favoured ones.  And not just for inheritance tax purposes, but also during your lifetime, so that you can enjoy a tax efficient income today.

Wills are an essential part of estate planning, but are limited as to what they can achieve. If you want control and certainty, as outlined above, you need careful planning and tailor made solutions.

In our experience it is possible to structure your affairs, for both Spain and the UK, so that the right money passes to the right hands at the right time, at the same time as reducing tax during your lifetime and after it. And this does not need to involve complicated administration either. 

It is however very important to use robust arrangements which are compliant in Spain and the UK.  As an expatriate you are likely to live in one country, have heirs in another and possibly assets in other countries. Cross-border tax and estate planning has become more complex over recent years, and you need to ensure your arrangements would stand up to scrutiny by the taxman. 

Creating and maintaining a good ‘estate plan’ is primarily about ensuring your wishes are carried out in the way you wish, but taking account of relevant legal and tax considerations.  The plan needs to be flexible to accommodate events like more grandchildren, divorce, re-marriage within the family, etc.  It is vital that you review it on a regular basis, so if you set up your plan years ago it will be time for a review. 

Estate planning is a very specialist area and professional advice from an experienced wealth manager is essential. 

To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com  

David Bowern, Partner, Blevins Franks
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Tel: 952 809 212

Tax rates, scope and reliefs may change.  Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change.  Tax information has been summarised; an individual is advised to seek personalised advice.

Blevins Franks Financial Management Limited (BFFM) is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731. Where advice is provided outside the UK, via the Insurance Mediation Directive from Malta, the regulatory system differs in some respects from that of the UK.  Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts and companies. Blevins Franks Tax Limited provides taxation advice; its advisers are fully qualified tax specialists.  This promotion has been approved and issued by BFFM.





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