What about cross-border succession?

These days successful executives and entrepreneurs often live global lives, with family, wealth and assets in many different jurisdictions. Being able to do so is one of the great advantages of the modern world, but it can make certain things – like inheritance planning – very complicated. Unfortunately, many people are not aware of the myriad factors that can influence the distribution of a multi-jurisdictional estate. This can lead to unpleasant surprises. When it comes to cross-border succession planning, it is therefore important to first understand how all the pieces fit together.

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Ours is not just a global economy. Increasingly our businesses, wealth and even families are spread out around the world as well. While global lifestyles have become increasingly viable in our modern world – and often quite desirable – inheritance planning for a multi-jurisdictional estate can be very complicated.

Consider the example of the French entrepreneur who lived and worked in Hong Kong but whose children were studying in the US and the UK, and whose more valuable assets included real estate in London and a bank account in Switzerland. He was under the impression that the will he had filed in France ensured the distribution of assets to his heirs strictly according to his wishes. After talking to a wealth planner he discovered to his surprise that this was not necessarily the case.

A host of factors

The truth is, cross-border succession planning can be far more complicated than it first appears. The following factors all play a role: 

  • Nature of assets. Bankable assets, real estate, art, operating companies, classic cars, boats – all have different characteristics which influence how they can be passed on.
  • Location of assets. The laws of the country where assets are located have a significant influence on who can inherit them. This can be tricky with mobile assets like planes or boats.
  • Domicile of owner. The laws of the country where the owner lives are naturally very relevant.
  • Owner's country of origin. The laws of the country where the owner was born, even if he or she no longer lives there, can have an effect too. US citizens, for example, are subject to US tax no matter where they reside; UK citizens can be subject to UK inheritance taxes even if they live abroad.
  • Location of heirs. This too is relevant as double-tax treaties between countries can reduce tax burdens, while some countries’ legal systems may not recognize succession planning vehicles valid in other countries. 

Plan ahead

There are other factors as well. The good news is that with proper foresight, all these issues can be managed. In our opinion, the first step is to ask some basic questions:

  • What do I own and where is it? Having a clear overview of your personal balance sheet is an essential requirement.
  • What do my assets mean to me? Are they pure investments, or do some have sentimental or heirloom value?
  • What do I want to happen to my assets after I die? Is continuity of ownership a priority, or philanthropic giving? Are there concerns about younger children inheriting wealth they may not yet be mature enough to handle?
  • What is the legal and tax situation? Is there a will? Is it globally valid? Do the laws of certain countries restrict your ability to reach your objectives? What are the tax implications? 

There are a lot of details to consider. That’s why in such cases the services of a wealth planner with global expertise can be of great use. An expert can ensure that all the necessary questions are raised, and provide the answers. He or she can also help a client see how the different factors relate to each other, and so develop an effective succession plan. Being able to live a global lifestyle is one of the great advantages of our modern world. It shouldn’t stand in the way of having one’s wishes carried out after death.