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Estate planning for expats
Obviously, this is a complex matter at the best of times, but when the international circumstances of the expat come into play, it becomes even more important to have a flexible plan, and to involve experts in the preparations where necessary.
Is it possible to plan for all the stages of life?
Yes it is, if you accept that your plan is likely to change because of new circumstances or changes to the laws and regulations. Of course your key beliefs will remain the same and not change with the tide. But it still pays to review your plan every year to see if it still fits your life circumstances.
An important fact about estate planning – you can't leave what you haven't got. The first thing to do is to ensure you have everything you need to live your life: a place to live, an occupation, health care and sufficient income to pay for it all. The same goes for your loved ones' needs. Only once those are met can you follow up with investment projects such as bonds and equities, investment funds and the like. And only when those are taken care of, you can move on to the possibilities for tax optimisation.
Too often, people try to run before they can walk, focussing on the later steps before the earlier steps are fully settled. Beware: the perfect legal and tax structure for expats is often so complex it requires constant revision in the face of changing civil and tax laws. The process is all the more difficult the more countries are involved in your personal history. You may have been married in one country, made a Will made in another and finally took up residence in yet another, all of which makes your situation more complex.
Some countries impose a liability on their nationals wherever in the world they may be resident. The USA, and the United Kingdom to some extent, are examples. Add in investments, including real estate, in different countries and you have the recipe for an ever-changing plan.
- The trick is to simplify and streamline your situation. Some key tips:
- Keep a file with all of your documents.Prepare a list of people for your loved ones to contact when you are gone: notary, lawyer, financial adviser.
- Be clear about your choices and the direction you want to go in.
The most complex situation for internationally mobile people usually comes in the 35-45 age bracket. Career expats at that stage have a life partner, children, assets including pension in different countries, and perhaps plans to change countries one or more times before retirement. In contrast to 55-year-olds, they still have no clear vision of the base country where they will lead the rest of their lives. Once that does become clear, adapting their plan to suit that country simplifies matters a lot. In the meantime, it's important to archive documents and keep close track of the way the legal and tax environment in your key countries is changing.
Head of Expats & Non-Residents at ING Belgium