by Ivan Doherty, Chief Operating Officer & Investment Advisor, IFG Asia
There are many things that expats need to consider when assessing the overall framework of their financial planning – bank accounts, pensions, life cover, medical insurance – but the one that is most often ignored is writing a Will. After many years of giving financial planning advice, my simple explanation is that nobody wants to think about ‘the end’, let alone put it in writing.
Dying intestate (without a Will) whilst living in a foreign country can be particularly time consuming and troublesome for family members who have to sort it out, indeed the legal costs and paperwork can mount up very quickly indeed. The process can run into years, not months!It is not just the lack of a Will that is a problem, it is also the lack of a schedule of assets. Do you have a defined list of your assets? Have you scheduled them with contact details, email addresses? Have the investments and accounts you hold changed name/ ownership over the years? This is time consuming and a thankless task, but forms an essential part of the succession planning process. If you do nothing else after reading this article, please do this.
For those who have only recently moved abroad, the task may be quite straightforward, but for longer term expats who have accumulated assets in various countries over the years, it can appear to be somewhat complex. To make it easy for you to think about, a general rule would be to have a will in every country where you hold assets.
The task of writing a Will need be no more complicated than opening a bank account, and in the new era of anti-money laundering paperwork, one could argue is actually a lot simpler.
Writing a Will in each country is an ideal scenario, but please ensure that there is consistency of wording i.e. make it clear that the Will only refers to assets in that particular country. A problem may occur when you have a Will in the US that says ‘I leave all my worldy goods to…’ but you have a Will for assets in Germany that says ‘I leave all my property located in Germany’. There is clearly a conflict of intention here and can be open to being contested. The language may be an issue too, in that if you have assets in Japan, it may be important that the Will be written in Japanese to ensure it is easy for the legal authorities to understand. Appointing an executor (the person legally appointed to handle the dispersal of assets detailed in the Will) should ideally be based in that country too, for ease of administration.
Some countries have forced heirship rules in that a certain portion of your estate MUST be left to certain individuals i.e. xx% left to your spouse yy% to each of your living children. The use of a will in some countries can over-ride these forced heirship rules, but not in others. It is vital to that you speak to a specialist in your country of residency to qualify the rules that apply to you.
Other complications that may arise are if you are not married, do the laws of the country you live in recognise a civil partnership? What is the nationality and/or domicile of your spouse/ partner? This may have an effect on assets left. If you have no children or you have children from two separate marriages, if there is no clarity of intention, this can lead to problems following death. If you have children who are under the age of 18, who is appointed guardian? Are they allowed to receive assets into their own name at a young age? These are all issues that a valid Will can help solve.
Certain countries recognise home-made Wills as legal documents as long as all the steps are followed in its construction. However as an expatriate, it is strongly advised that you use a legal professional to draft your Will(s) to ensure that the document is ‘fit for purpose’. The worst case is going to the effort of drafting one and it not working.
If you hold investments and accounts in various countries, it may be possible to lodge a ‘beneficiary form’ or ‘letter of wishes’ with the institution, please ask them what they need, this can help alleviate problems with certain assets. Please ensure that the intention matches any future Will that you may write.
You can also create Trusts, either ‘inter vivos’ (during one’s life) or a Trust that is created by your Will on death which can add additional control over and above what a Will could offer. This is a subject for another day.
In short, a Will puts wealth into the right hands, in the right proportion at the right time. Please don’t put off this essential piece of planning.
About the author
Ivan Doherty manages a portfolio of client investments across a wide range of industry sectors. He has 20 years’ experience in Financial Planning and holds advanced professional qualifications (G60) with the Chartered Institute of Insurance in the UK. His company role is of Chief Operating Officer for the IFG Asia business.
Ivan has a significant knowledge on group retirement and employee benefit schemes and individual retirement planning and budgeting.
As a long term resident of Japan, Ivan has built a large network of contacts who specialize in wide ranging areas to assist expatriates with their overall planning, such as tax, banking, trust and will planning.