Are you the next Logan Roy? 

Estate planning for international investors is an essential but often over-looked issue.  Fans of the TV series ‘Succession’ will have seen the friction and fractures that can happen when a family sets about structuring, protecting and planning on how to pass on its assets.  Over-dramatised and writ large for TV, the show nevertheless exploits emotions and situations that are faced – even if on a smaller scale – by many families.  Spoiler alert: recently even the patriarch, Logan Roy, discovered that no one lives forever. Alas, our departure is rarely glamorous but a heart attack in your private jet?  The ultimate control freak found that death respects no business plans.

In my experience, very few clients enjoy mapping out their Wills. There is always conjecture or uncertainty about when it might be required, whether children will either be adults or have their own grandchildren, and even what is included or excluded from the estate.  It always seems to be a job that can be put off for another day.  But as the fictional Roy family is discovering, doubt can cause many difficulties, especially when the deceased is not there to explain everything.  

A better approach is simply including Estate Planning as part of your overall asset protection plans.  When looking at structures such as superannuation, investment companies, and trusts, consider the taxation and implications and what happens in the event of death.  Taking this approach means that the eventual ownership of assets is considered in the full ownership cycle, and makes the planning of Wills much easier.

So what’s in and What’s out?

It’s important to recognize that not all assets are included and that some may be subject to different rules and regulations depending on how they are held or structured.

In general, assets that are included in your estate include real estate, personal property, bank accounts, investments, and other financial assets. However, there are a number of exceptions and special cases to consider. For example, in Australia, superannuation is excluded from the estate and is distributed according to the terms of the superannuation fund. Similarly, assets held in a trust don’t normally form part of an estate – which is one of the main advantages of having a trust in the first place.

Another important consideration is assets that are held in a corporate structure, such as shares in a private company. In this case, it is the shares themselves that form part of the estate, rather than the underlying assets or property owned by the company. This can have significant tax implications, as well as impact how the assets are distributed and managed.

Another alternative is to do what Logan Roy did – transfer asset ownership to your desired beneficiaries while you are still alive.  His estranged wife Marica quickly returned to the scene to confirm that she was the owner of Logan’s stunning NYC townhouse (and nearly just as quickly agreed to sell it to Logan’s eldest son).  So, no probate issues, arguments or inheritance tax with this asset.  It’s not always easy nor inexpensive though, to transfer assets already owned,  Therefore, it’s prudent to put into consideration the ownership structure and its implications for your estate planning, before they are purchased.

One or Many?

The issues of Estate Planning are increasingly important as international investors have assets in multiple jurisdictions, each with their own testator laws, administrative rules and taxation regimes.  What is the best approach?  Should there be one worldwide Will or separate Wills for each jurisdiction?

One of the key decisions you’ll need to make is whether to have one will or separate wills for each jurisdiction. While having one Will may seem simpler and more cost-effective, it can lead to complications and delays in the probate process if there are inconsistencies with the local laws in each jurisdiction. On the other hand, having multiple wills can be more time-consuming and expensive. 

International investors need to consider other:

• How practical is it to have one executor having to deal with different estates via agents as opposed to several different executors
• The potential for conflicting clauses in different Wills
• The risk of inadvertently revoking a will while dealing with assets in another jurisdiction
• The difference in language, culture legal terminology or legal principles, such as forced heirship rules

For example, Aussies are used to having no Death or Inheritance Tax, and the right (subject to legal challenges of course) to leave their estate to whoever they chose.  Not so in Switzerland, where there are statutory inheritance proportions for family members, and most canons impose an inheritance tax.  Similarly in the UK, where their inheritance tax is quite punitive and drives much of the sale of life insurance.

My personal opinion is that, in the majority of cases, it pays to have a Will in each jurisdiction where assets are held, but ensure that these are harmonised across assets and beneficiaries to minimise the potential for challenge.

The role of your personal Chief Financial Officer

This is all wonderful theory, but it means little unless action is taken. That is where I come in as an independent adviser.  Acting as your personal Chief Financial Officer, I take my understanding of your assets and family succession preferences and identify practitioner experts.  Next, together we brief them to draft appropriate solutions that complement each other and bring into reality the plans you have for your family’s assets.  Importantly, the qualitative values you hold are just as relevant as the assets themselves and these values can be explained and incorporated into your plan.

So if you’re an international investor looking to protect your assets and ensure a smooth transition of wealth to your heirs, contact me today to learn more about how I can help you navigate the complexities of estate planning and succession issues.

Geek Corner:

Dino De Rosa writes a good overview for Australian residents here.  Part of my role is to source and coordinate the foreign legal experts that he refers to and ensure the Wills are coordinated

An excellent list of the pros and cons of single v multiple Wills by Margaret O’Sullivan can be found here.  Though written from a UK perspective, the arguments are relevant for all jurisdictions.

An overview of Swiss succession laws – very anti-libertarian from this Aussie’s perspective!

Eben Nel put together a very interesting paper Estate Planning and Wills Across Borders: Sometimes a Quagmire in the Making.