Since the 90s, the number of British households owning a property abroad has increased dramatically. Some Britons choose to move abroad upon retirement, while many others have second homes in places like France or Spain that they use as holiday homes. Whatever the reason to own property abroad, it is important to have all loose ends tied up so that your property dream does not become a nightmare for your family.
When buying a property abroad, most people are careful to obtain legal advice in relation to all aspects of the purchase. Some also organise things for the short and medium-term, for example making sure their property is properly taken care of when they are back home. However, as some specialised law firms such as Vanner Perez Notaries know too well, it is surprising how many people forget or prefer not to think about the long-term consequences of owning a property abroad.
Preparing a will is always advisable, even in respect of property owned back at home. When it comes to property located abroad, a will can save your relatives endless problems, who could otherwise see themselves having to deal with the complex rules of a foreign legal system in order to sort out the inheritance.
In England and Wales, if someone dies without leaving a will, the deceased’s property passes to his or her relatives, following a specific order of preference stipulated by law. For instance, if the deceased had a sister and a daughter, it will usually be the daughter who has the right to inherit over the sister. The list of relatives who inherit when no will exists is contained in the Administration of Estates Act 1925. Similar rules exist in countries like Italy, France or Spain, where many Britons own property. However, the list of relatives under, say, Italian law, does not necessarily follow the same order that would be followed under English law. And it is possible that neither of those lists reflect what the deceased would have preferred to happen with the property.
Because the rules of two or more legal systems may clash in situations like these, there are specific ‘international law’ rules to establish which system applies to a particular case, and therefore who should inherit a deceased’s property. However, these rules are not always crystal clear and it can take a lot of time and money to gather all the documentation required and go through the necessary procedures in order to register the foreign property in the name of the correct heir(s).
Executing a will can make things immensely simpler. The owner of the property can use the will to select very clearly who should inherit. Also, the existence of a will normally makes it much easier to deal with the inheritance-related procedures, for instance when presenting the documentation to the foreign Land Registry for the change of ownership of the property.
Most foreign countries recognise the validity of a will executed by a British citizen in England, even if it relates to foreign property. However, in some cases it might be convenient to execute a separate will in the relevant country. In any case, specialised legal advice should be obtained to make sure that the will is enforceable in the relevant country, that it properly reflects the wishes of the testator, and that if a will already exists relating to property back at home, this is not accidentally revoked by the new will. The local inheritance tax rules should also be borne in mind. Last year Ernst & Young published an International Estate and Inheritance Tax Guide which can be of interest to those with property abroad. It can be found here.