Wills and Cross-Border Estates
Events following the bereavement of a loved-one can be overwhelming but we can help take away some of the administrative burdens of Probate and give you one less thing to worry about. If you have been appointed as a Personal Representative (executor or administrator) to wind up a deceased’s estate, you will be faced with some important responsibilities.
Morgan McManus Probate Services
The role of an executor or Personal Representative can be an onerous responsibility and leave you open to personal liability, but we can help you manage the risks involved.
We will report to you throughout and ensure you fulfil your responsibilities. We will give you a detailed estimate of the costs at the outset and manage the entire process to make sure you will be free of risk and the estate is administered correctly. The tasks we will complete for you are:
- Meet with you to ascertain assets and liabilities of the estate
- Obtain Valuations
- Prepare the Schedule of Assets and Liabilities required by the Revenue Commissioners / Probate Office
- Prepare the Inheritance Tax Returns, where required
- Apply for and obtain appropriate the Grant of Probate / Administration
- Arrange to settle Inheritance Tax and negotiate Tax clearance with the Revenue Commissioners
- Gather assets, arrange to pay liabilities
- Guide you on sales of properties or assets
- Pay Bequests
- Liaise with your Accountant in relation to the preparation and submission of Income Tax Returns from the date of death
- Prepare Estate Accounts
- Arrange distributions to Beneficiaries
- Transfer assets and advise about any continuing Trusts
The administration of an estate following a death can be more complicated when there are foreign assets involved. Cross-Border issues include a deceased holding property outside Ireland, having a connection abroad such as being a British national yet also having lived in Ireland for many years or having beneficiaries living abroad. Careful consideration must be given to questions around which jurisdiction’s laws should apply to the succession of the assets of the Deceased. The laws relating to the rights of spouses and children, intestate succession and taxation vary dramatically from jurisdiction to jurisdiction. At Morgan McManus we have many years of experience in advising on the administration of Cross-Border estates, particularly where those estates cover property and assets in Ireland, Northern Ireland and rest of the UK.
Not surprisingly, it is the tax collection agencies in each jurisdiction involved who are most concerned about Cross-Border estates. They want to ensure that a deceased taxpayer, in respect of whom they have taxing rights, does not slip through the net of taxation. Each jurisdiction has its own basis for taxing the assets of a deceased person. It can arise that two jurisdictions may claim to have rights to tax the same estate or certain assets of any estate and, in those circumstances, typically there will be Double Taxation Treaties in place to ensure that an estate is not taxed on the double.
Non-Resident Beneficiary / Personal Representatives
In Ireland there are special rules in place to ensure that foreign beneficiaries do not take a benefit from an Irish Estate without the tax aspects being dealt with. Where there is a Non-Resident Beneficiary and at least one Resident Personal Representative / Executor, then under Section 45AA of the CAT Act, as inserted by the Finance Act 2010, the Personal Representative is treated as agent and is personally liable for the unpaid inheritance tax of the Beneficiary. To protect a Personal Representative from a foreign beneficiary who might be disinclined to pay their lawful taxes, the Personal Representative is given various statutory powers to obtain money from the benefit under the estate to ensure that tax is paid and indeed such Personal Representatives have a statutory power of sale property in order to raise funds to pay the Inheritance Tax.
Where there is a Non-Resident Beneficiary and all of the Personal Representatives/Executors are Non-Resident, then the Personal Representative must appoint a Republic of Ireland practising solicitor to deal with the Administration and such solicitor is treated as “agent” of the Beneficiary under Section 45AA and is personally liable for the unpaid tax of the Beneficiary. Once again the solicitor is conferred with statutory powers to ensure any inheritance tax is paid. Morgan McManus have broad experience of dealing with the administration of estates falling into this category.
Wills and Cross-Border Assets
An Irish resident person with assets abroad should seek specialist advice from Morgan McManus in terms of the type of Will they should have in place. Firstly, there can be complex aspects arising from joint ownership of foreign assets, where such assets may not transfer on death in the manner expected. Other jurisdictions have their own rules of “forced heirship”; i.e. the deceased person does not have total freedom to decide what happens their assets. Local laws where the foreign property is based may prescribe that the assets must vest in spouse and/or children in certain shares, regardless of what any Will may provide – regardless of where such Will was made.
While the 1961 Hague Convention long since provided for mutual recognition of Wills between many countries e.g. the terms of an Irish Will will be recognised in the UK or Australia and vice versa; the traditional advice for a person with Cross-Border assets is to have a Will made in the foreign jurisdiction where the asset is located and to take legal advice in that foreign jurisdiction about local rules of “forced heirship”. Such people may also need to satisfy themselves in respect of any peculiarities about what happens if a joint owner dies. Taking tax advice as to the manner in which a person’s foreign assets might be taxed in that other country would also be relevant.
EU Succession Regulation (EU/650/2012)
Within the EU, further efforts have been made to provide a more integrated framework for Wills with an EU Cross-Border aspect. In particular, such efforts have focused on allowing a person making the Will to side-step foreign law of forced heirship by choosing that the succession laws of their habitual country of residence will apply to their EU based foreign assets. Those efforts came to fruition on 17th August 2015 when the EU Succession Regulation (EU/650/2012), known as Brussels IV, came into effect.
Unfortunately, there are some question marks over how this will operate in practice and a bedding in period may be required so that, for example, the person making a Will in France can be absolutely confident that they will not end up in a red tape nightmare in convincing the German Probate authorities that French succession law applies to their German property.
From an Irish and UK perspective, the effect of the Regulation is even more difficult to ascertain with confidence. Ireland, along with the UK and Denmark, have opted out of Brussels IV. On the basis of having one’s cake and eating it, the hope is that EU countries will allow an Irish Will to specify that Irish Succession Law should apply to the asset in the other EU country even though Ireland will not reciprocate the arrangement. So, for example, an Irish Will specifying that Irish Succession Laws apply to a French property should be recognised in France even though a French Will specifying that French Succession laws apply in Ireland will not be recognised in Ireland. How Ireland’s lack of reciprocations will be viewed by the French authorities in the example is still somewhat unclear. Until there is greater confidence as to how Brussels IV will operate in practice, one may be still well advised to have a Will in the foreign jurisdiction in which the property is located or otherwise take advise in that jurisdiction to ensure that Brussels IV will operate to recognise Irish Succession laws.
It is a complex area and specific advice should be taken from Morgan McManus Solicitors.
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