Legal Guides

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Checklist for estates with overseas beneficiaries

When considering estate administration abroad, it is important to take note of the difficulties and confusion that cross border laws can cause.

We have conducted a checklist of factors you will have to consider:

Getting Valid ID documents

This may seem like an obvious factor, but it is essential that you are certain on the validity of the beneficiary’s ID before sending any payments to them. Most commonly, this will involve the beneficiary sending proof of their ID to you, for you to make a copy. However, before copying the ID documents, make sure you have done your research to make sure they are genuine – you don’t want to make a silly error here and legalise a fraudulent document.

In most circumstances, it is best to ask the overseas beneficiary to provide a notarised copy of their ID, certified by a notary public and legalised with the Hague Apostille in their own country.

Foreign tax

Beneficiaries abroad may face double taxation, even if the Inheritance Tax has been paid in the UK.

Overseas beneficiaries can often be entitled to receive a refund or ‘Double Taxation Relief’. If the overseas beneficiary has paid tax in an overseas country and the relief is due, they will receive a credit for the tax paid overseas against the Inheritance Tax in the UK on the same assets as what was paid overseas.

The Double Taxation Relief often needs to be claimed from HMRC by the solicitor dealing with the UK estate, rather than the beneficiary’s country of residence. Therefore, it is always worth considering the tax position to ensure the correct application will be made to HMRC or that you can provide the beneficiary with the valid information to limit, or even avoid, double taxation as much as possible for the overseas beneficiary.

International bankruptcy search

An overseas bankruptcy search mitigates the risk of both the personal representatives, and/or the solicitor being subject to a claim for compensation from a bankruptcy beneficiary’s creditors.

The price and procedure for each country’s bankruptcy search varies. This is because each jurisdiction is completely different to each other. The general information to conduct an overseas bankruptcy search is the beneficiaries name, date of birth and resident address, however, some countries can require extra details such as a NIE/ NIF (tax number), a social security number (for searches in the USA) Tax Registration Number (TRN) or a passport number.

International Bankruptcy Searches is a useful website which provides all information on what each country needs for a bankruptcy search, prices of searches and how long the process takes. You can order an international bankruptcy search directly through the page, or if necessary, you can carry out multiple searches.

Currency exchange

When distributing funds to a foreign bank account, it is best to research the options to find out the most cost-effective way of conducting the international payment and how to protect inheritance funds when transferring money abroad. If the right method isn’t chosen, it can cost the overseas beneficiary hundreds, or thousands of pounds, which of course is an unnecessary waste of money.

To find the most cost-effective method of moving money abroad, using a foreign currency exchange specialist to advise how to transfer the money, and to exchange the money, is more effective than receiving and transferring the funds directly through a high street bank. This is because high street banks usually charge fees between £20-£40 each time to transfer money overseas, alongside the exchange rates.

The benefits of using currency specialists over high street banks:

  • Exchange rates are typically 3-5% better than high street banks
  • They know the best timings to avoid currency fluctuations
  • Can help reduce costs of estate administration- overseas legal fees, inheritance taxes etc.

Article written and contributed by Sara Janion, International Bankruptcy Searches

ISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. It is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to International Bankruptcy Searches directly.

Published on 21st February 2022
(Last updated 21st February 2022)

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