Australian Wills: what happens if you own international assets?
When getting your Will sorted, one of the first questions you’ll get asked by your lawyer are ‘what assets do you own?’ and ‘how do you own them?’ While your Australian Will covers all of your Australian assets, if you have assets overseas it’s important to know how or whether your Will also deals with any overseas assets you may have.
Just as Australia has its own laws on disposing of assets on death, each country has their own set of rules as well.
Which countries recognise an Australian Will?
As a Commonwealth country, Australia shares a similar legal system to other Commonwealth countries which means that generally these countries will recognise an Australian Will.
Commonwealth countries include our close neighbours New Zealand and Papua New Guinea, and further afield are the United Kingdom and Canada.
If Probate is needed to look after your estate when you’re gone in any of the Commonwealth countries then getting a Reseal of the Grant (in Australia or in the overseas country) can be a fairly streamlined process.
But while your Australian Will may be recognised in other Commonwealth countries that you own assets in, there are other considerations. Such as – inheritance tax. For instance in the UK, whether UK inheritance tax is applied to your estate or not will depend on the value of assets left and whether you are considered to be domiciled in the UK at the time of your death.
Happily Australia abolished inheritance tax in 1979. What does this mean? If your Australian Will covers all your assets in Australia and the UK, you run the risk of UK inheritance tax kicking in and applying to ALL your assets, not just the UK assets. Tax can be tricky when navigating these waters and expert tax advice is always a good idea. What can you do? Get a separate Will in the UK to deal with UK assets and a separate Will in Australia to deal with your Australian assets so they are treated and regarded separately.
What do you do when you have assets in Australia and non-Commonwealth countries?
If you are an Australian and own assets in countries that are not part of the Commonwealth, you may have a couple of options: get an international Will or get concurrent Wills.
While getting just the one Will to look after it all may sound fab, nothing in law and life (or death) is ever without pros and cons so here’s the lowdown.
In 2015 Australia joined the UNIDROIT convention which provides a uniform law for International Wills to be recognised between the countries signed up to the convention. That means that if an International Will is prepared in accordance with the convention’s requirements you can have just one Will to look after your assets as long as those assets are held by the countries also part of the convention.
The idea behind this convention is to simplify recognition of Wills between countries so that concurrent Wills aren’t needed. Sounds great. The drawbacks?
- Only a number of countries have signed up to the convention so the benefits of having an International Will are a bit hit and miss.
- International Wills don’t take into account local laws and how the Will actually affects your assets
- Survivorship and inheritance laws in different countries may override provisions in the International Will
- Difficulties in applying for Probate in different countries due to most courts requiring the original Will
Concurrent Wills refers to having a separate Will in each country you own assets in. This is often the best option. While this option can seem more onerous as you would need to seek legal advice in each country you own assets in and arrange to get your Will prepared often from afar, Zoom and technology has made accessing legal services easier from great distances. Case in point – we’re a virtual law firm and distance is no barrier.
So why are concurrent Wills often the better option?
- Your Will in each country will abide by the local laws to deal with those assets legally so that your Will has the effect you want to accomplish your goals.
- Your executor in one country may find it hard to deal with the deceased estate laws in other countries where they are not domiciled to create administrative difficulties – not to mention applying for Probate and administering your estate
- You may have translation and interpretation issues with your Will
- You quarantine the risk of inadvertently triggering tax liabilities that may apply in 1 country but not another.
Here are a few tips if you’re thinking of getting concurrent Wills:
- Let each local lawyer know if you’ve already got a Will in another country
- Make sure your Wills don’t contradict one another
- Mae sure your Australian Will restricts itself to only your Australian assets
What to do: your Will and foreign assets
If you have assets in Australia and overseas we will generally recommend getting concurrent Wills so that you have the benefit of specialist local legal advice to make sure that your assets will be dealt with as you intended. Different laws mean that even if a document is recognized as a legal Will in each country, it may not have the desired effect with beneficiaries missing out, executors experiencing headaches and tax liabilities incurred which could have been avoided.
When getting your Will sorted make sure to let your lawyer know all of your assets, in Australia and overseas. Make sure you get the right tax advice for your assets both locally and in other countries that apply. Get the right advice to make sure your loved ones are protected and you don’t leave a legacy of distress.
If you need advice on getting your Will sorted or would like to take the first step, give us a call on 1300 034 487 or email us at [email protected] or book in a free 10 minute chat with a lawyer here.
We’ll look after you.