Future Proof Expat Succession Planning

Succession planning is a vital consideration for expats worldwide. It refers to detailed plans that preserve wealth for future generations and set out how your estate and assets will be distributed to your beneficiaries.

Putting a strategy in place can make inheritances significantly more streamlined for your heirs, with full oversight of inheritance tax and potential options to structure your assets to reduce the sometimes considerable tax exposure linked to inherited assets.

However, succession planning can be difficult, and for expats, the added complexities of international wills, variable global inheritance rules, and tax exposure make detailed planning essential.

We’ve collated our tips for efficient succession planning below, all of which can ensure that, when the time comes, your beneficiaries will be both well prepared and well provided for.

An Overview of the Value of Expatriate Succession Planning

The reluctance to talk about a will and who will inherit proportions of your estate is a common issue, but it is essential to communicate.

Not understanding whether there is a will, or not having selected a spouse, partner, or family member to hold appointed Power of Attorney can make the inheritance process stressful, complicated, and ultimately more expensive than it may have needed to be.

There are many things to think about:

• Inheritance tax implications and how to minimise that obligation.
• Having a valid will which is recognised in your country of residence.
• Power of Attorney rights and who should hold them.
• Regularly updating your plans and reviewing your circumstances.
• Letting your family know what will happen and what they need to do.

Many countries have legislation different from that in the UK, including forced heirship rules, which dictate the minimum percentage of your estate that must be passed to specific family members, usually children and spouses.

Additional issues can arise for expats who live overseas but are still considered UK residents. From April 2025, a new categorisation system will mean that exposure to UK inheritance tax will depend on the residency status of the estate owner, although UK-based assets will remain subject to British taxation.

The Importance of Reviewing Your Will as a British Expat

When we talk about succession planning, the first thing that springs to mind is a will – a legal document that sets out what you wish to happen with your estate when you pass away.

Doubtless, a will is a vital part of the process. Many of us create a will at some stage and then leave it in situ – but it is essential to review this periodically because:

• Most UK wills carry a default clause that overrides all earlier versions – and so, if you have a second will in another country, you will need to update both to avoid invalidating an overseas document or causing inadvertent conflicts if there is ambiguity about which takes precedence.
• Your will should include all of your major assets, and so if you have disposed of a property or investment or acquired new assets, you should update it, alongside reviewing how forced heirship rules might impact your wishes.
• Beneficiaries may change over time if there is a marriage or new children in the family, which also requires an amendment, and you may need to inform life insurance providers if you wish to review the nominated policy beneficiary.

Having two wills, one in Britain and one in your country of residence, can be inadvisable, but in any scenario, these should align to avoid contradictions that can be complex to resolve. We’d suggest you consult an experienced wealth manager who can advise you on the right way forward.

Creating a Recognised Will in an Overseas Country

Overseas wills are normally recognised as legal documents in other countries, but having just one will in the UK if you are an expat living in Spain, France or Portugal, for example, isn’t usually the best solution.

In most cases, this would have to go through the UK probate system and then be officially translated and notarised into the language used in your country of residence, which can take a substantial amount of time and cause delays for your heirs.

As we’ve intimated, many countries also have specific rules about how and to whom an estate can be distributed:

• Forced heirship rules can stipulate who can receive a fixed proportion of your estate. For example, the norm is for two-thirds of Spanish estates to be distributed to children, with one-third being distributed equally and the remainder allocated according to the will.
• Portugal also has forced heirship laws; generally, spouses are automatic heirs if you do not have children. Otherwise, two-thirds of the estate is reserved for children and a spouse.

It is crucial to understand the local succession planning rules, how these impact your will, and the options available to retain the right to control who receives your assets. You should also understand the structures you can put in place to effectively override forced heirship, should this be necessary.

The Importance of Granting Power of Attorney During Succession Planning

While having a will is commonplace, Lasting Power of Attorney is often overlooked. It is worth considering If you’re looking to make things as straightforward as possible for your heirs.

Having a representative who can make decisions on your behalf can be a safeguard in unforeseen circumstances and ensure that your wishes are respected. An appointed Lasting Power of Attorney can handle events such as:

• Making decisions about your care and medical treatment.
• Authorising payments from your bank accounts.
• Managing investments and pension schemes.
• Dealing with the sale of properties.

Lasting Power of Attorney may be crucial if you become unwell or have an accident. It means you have chosen a representative who you trust to manage your assets sensitively and as you wish.

As an overseas expat, the courts can potentially take control of your assets if you have not granted Lasting Power of Attorney.

Pension Planning for Expats

Pension funds are relevant since most schemes allow you to designate a beneficiary who will receive any residual value of your pension fund if you pass away – although this will depend on the specific fund, terms and type of pension scheme.

As with a will, you should review this nomination to ensure that a recipient has been named and that this remains in line with your wishes.

Should you pass away and not have an up-to-date expression of your wishes identifying who receives any funds in your pension scheme, this can give rise to disputes and rely on the pension trustee deciding on the outcome.

Inheritance Tax Strategies for UK Expats Overseas

Finally, it’s important to review your tax liability – because many beneficiaries are left in a difficult situation when they discover they are entitled to assets from an estate.

In the UK, the standard inheritance tax rate is 40%. This is payable within six months, and the recipient cannot sell the assets to raise the finances to cover the tax. However, from 2026 onward, recipients may be able to pay inheritance tax over ten years in equal instalments for inheritances related to agricultural and business premises.

Further reforms mean that unused pension benefits and death benefits from life insurance may be included in the scope of inheritance tax from April 2027 onward.

Structuring your will and estate can make a significant difference in the value of your estate, the tax burden on your beneficiaries, and the ease with which your assets can be distributed.

For example:

• Putting assets into a trust can be a tax-efficient option – but the type of trust and location will impact the tax arising, and it is essential to review tax treatments such as income and Capital Gains Tax.
• Your residency status will also have an effect and may determine in which country your assets are liable for inheritance tax – while noting the earlier rule around UK inheritance tax always applying to assets based within Britain.
• UK inheritance tax is charged on worldwide assets, so the inheritance tax owed on any overseas investments or properties will very much depend on whether you are treated as a UK resident or a long-term overseas resident for tax purposes.

Estate and succession planning should always be bespoke to your circumstances, estate and beneficiaries, given the wide array of considerations, complexities and potential issues we’ve explored here.

It is important that you seek independent guidance from a financial adviser with international expertise who can provide accurate, relevant advice and potentially recommend tax-efficient structures for your assets.

By working through each of these factors, you may have the opportunity to reduce tax liabilities for your heirs, ensure your estate is distributed as you wish, and avoid the costs and time linked to probate and inheritance issues later on.

For a comprehensive review of your succession planning strategy, please contact your nearest Chase Buchanan office. Our consultants have years of experience structuring efficient estate management plans for overseas expats, with the security of your beneficiaries and retention of your wealth as our key priority.

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* Updated April 2025