It is now becoming more common for people who live in Australia to have assets overseas. If you own assets overseas it is important to be aware that each jurisdiction has its own legal system and tax laws. You should not assume that the succession laws and tax regimes you are familiar with in Australia will apply in relation to any overseas assets you own.
As a general rule, we recommend seeking specialist legal and financial advice from professionals who have an understanding of the succession and taxation laws in the country in which the asset is located.
Disposing of foreign assets
It is an option to dispose of your foreign assets prior to death and send the proceeds to Australia or to another jurisdiction. However, you should consider the time available and the financial implications for this strategy, for example adverse taxation consequences (such as stamp duty, capital gains tax and foreign investment tax) and currency exchange rates.
Assuming that you do not plan to dispose of your overseas assets prior to your death, it is generally recommended that you have a separate Will in the relevant jurisdiction that deals with the overseas assets. In other words, you would have an Australian Will to deal with your estate not including your overseas assets and a second Will in an overseas jurisdiction to deal with the distribution of your overseas assets and which complies with the relevant laws in that jurisdiction. This will allow you to choose an appropriate executor in that jurisdiction to deal with issues such as the local procedures for probate or administration of estate and any taxation implications (for example whether the foreign country imposes an inheritance tax).
Testamentary laws can be complex, and are further complicated by the interrelation of foreign legal systems and taxation laws. As a testator with foreign assets, the starting point for you is to:
- be aware that different laws will apply to your assets held in foreign jurisdictions;
- make your lawyer and financial advisor aware of these assets and where the assets are located; and
- make your lawyer and financial advisor aware of what your intentions are for the assets in the event of your death.
We recommend you seek specialist legal and financial advice from professionals who have an understanding of the succession and taxation laws in the country in which the asset is located. Your lawyer and financial advisor will then be able to give you specific advice about your estate planning options based on your individual circumstances.
Our estate planning lawyers have the knowledge to guide you in creating an estate plan that suits your individual needs. If you would like to discuss your estate plan, please give us a call.