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| • EXCH RATES |
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Baht/$ 34.23/25 (Bid/Ask)
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GOLD |
13,350
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NET Worth
ANDREW WOOD
If you die tomorrow do you know what will happen to your assets? Are you aware that probate will need to be granted? Do you know what probate is?
Old age, illness and death affect everyone eventually. It makes sense to plan for what will happen when you pass away and make it as easy as possible for those you leave behind.
Probate is something that will affect your estate immediately after you die. Probate is authority given by a court to the appointed executors of your estate. Once probate is granted, the executors may administer your estate, discharging your liabilities and distributing the remaining assets in accordance with your will. Executors can also be beneficiaries.
If you are an expat the requirements for probate are likely to be a little more complex. This is because you will probably have assets, be they real estate, bank accounts or other investments, in more than one country or legal jurisdiction. Probate will be required in any country where you own your assets.
This seems simple enough until you start to consider the complexities that can occur. A real case occurred in recent years where a British expat living in Thailand died. He had property in the UK, two condominiums in Thailand, investments in Hong Kong, a savings plan in Jersey and a personal portfolio bond in the Isle of Man (IOM). There were also bank accounts in IOM, Hong Kong and Thailand. He had made a will that was written and valid in Thailand. He left a Singaporean widow to whom he left his entire estate. It appeared relatively straightforward and simple.
However, his widow discovered that she could not have access to his assets without probate in the countries concerned. She thus approached a lawyer. Each of the jurisdictions concerned requested to see the grant of probate from the other jurisdictions before it would issue a grant of probate itself. This was a classic chicken-and-egg situation. The widow was in a very difficult situation and eventually IOM agreed that it would consider the case again if a copy of the will was certified by the lawyer who wrote it and that certification was notarised by the courts in Thailand. Luckily the lawyer was located and the process began.
It took two and a half years to obtain probate from all the countries concerned. Meanwhile the poor widow had no access to the assets and had to make alternative arrangements to fund her ongoing legal and living expenses for the entire time.
It was only after the grant of probate in Thailand that the property there could be considered and was free to be sold. The UK property was subject to review and inheritance tax (IHT) was due on the entire estate as the widow was not domiciled in the UK. It was only after all assets had been valued and probate granted in all jurisdictions that the UK situation could be finalised. Following assessment and payment of IHT, the property was free to be used or sold.
One of the frustrating factors that the widow suffered was that the personal portfolio bond in IOM and the savings plan in Jersey were both wrapped in insurance policies. Had the investor completed simple beneficiary nomination forms for these investments, the institutions concerned would have paid the benefits to the widow within 30 days without reference to probate and without any deduction of UK IHT. The fact was that because of the lack of these declarations the benefits were left to the estate that was subject to the granting of probate. Had the investor originally sought comprehensive advice from a professional financial adviser, his widow would have avoided some of the difficulties she experienced.
Many expats these days use trusts, which can also be very useful in overcoming the necessity for obtaining probate. A trust is the legal owner of specified assets that you have transferred to it. Such assets fall outside your personal estate if you pass away. This is because the trust owns the assets rather than you. The assets in the trust are therefore not subject to the granting of probate. Trustees are free to distribute these assets in accordance with a letter of wishes given by you to them without the need for obtaining probate.
If you have all your assets tied up in banks and cash deposits your heirs may well have a serious problems in accessing any cash until the granting of probate. Even then, depending on your nationality, there could be a hefty IHT liability that could be mitigated if you take the right action now.
Your specific circumstances may seem less complex but they may actually be more complex. It is certainly worth considering what will happen when you die. Probate can be a major obstacle that your heirs need to face. The best advice is to consult with a professional independent financial adviser to ensure you have all the loops closed.
Questions to the author can be directed to Barclay Spencer International on 0-2653-1971 or e-mail to info@barclayspencer.com
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