Estate planning with multiple wills for foreign assets
Estate planning is a vital aspect of ensuring the smooth and efficient distribution of assets after an individual’s passing. However, when dealing with multi-jurisdictional estates, where a person owns assets in different regions or countries, the complexities can multiply. In such cases, the use of multiple wills has become a common and practical approach to manage the intricate web of legal requirements. Multiple wills allow for a clear and effective division of assets, ensuring that each jurisdiction’s laws are properly respected.
The Basics of Multiple Wills
Multiple wills, also known as “dual wills” or “cross-border wills,” are an estate planning strategy designed to streamline the administration of an estate with assets spread across different jurisdictions, such as provinces, states, or even countries. The basic principle behind multiple wills is to have two separate wills: one for assets located in the jurisdiction where the individual resides and another for assets situated in a different jurisdiction.
Key Features of Multiple Wills
- Delineation of Jurisdiction: The primary principle of multiple wills is to specify which jurisdiction governs the distribution of assets. The will in the jurisdiction where the individual resides typically covers all intangible assets worldwide, including bank accounts, stocks, and financial instruments, as well as tangible assets situated within that jurisdiction, such as real estate and vehicles.
- Second Will for Tangible Assets: The second will, often referred to as the “foreign will,” is drafted in the jurisdiction where tangible assets are located. This will exclusively deals with the distribution of assets located in that jurisdiction, ensuring compliance with local laws and regulations.
- Specific Asset Allocation: Dual wills allow for the precise allocation of assets based on the legal framework of each jurisdiction. This minimizes potential conflicts and ambiguities that may arise due to varying legal requirements.
The Benefits of Multiple Wills
- Legal Compliance: Multiple wills help ensure that the distribution of assets adheres to the specific legal requirements of each jurisdiction. This reduces the risk of disputes or challenges and provides a clear framework for asset distribution. The alternative, using one will purporting to deal with assets worldwide, might not be legal in all jurisdictions. That may lead to disinheritance and legal disputes.
- Simplified Probate: Probate, the legal process of validating a will, can be a complex and time-consuming procedure. By having separate wills for different jurisdictions, the probate process may be expedited, leading to faster asset distribution.
- Cost Savings: While there are additional up-front legal fees associated with drafting multiple wills, these costs are outweighed by the long-run savings in the time and costs associated with probating the same will in multiple jurisdictions.
- Privacy Protection: In some cases, having a separate will for assets in a different jurisdiction can help maintain privacy by keeping certain assets and their distribution confidential.
Challenges and Considerations
- Legal Advice: Estate planning, especially for multijurisdictional estates, requires the expertise of estate lawyers who are well-versed in the laws of the relevant jurisdictions. Seeking legal counsel is essential to ensure that the dual wills are legally sound and fulfill their intended purposes.
- Changing Circumstances: It’s crucial to periodically review and update multiple wills to accommodate changes in assets, tax laws, and family circumstances. Failing to do so can result in discrepancies and complications in the future.
- Tax Implications: Multiple foreign wills can have tax implications, as each jurisdiction may have its own tax regulations. Professional guidance is essential to optimize tax efficiency within the framework of multiple wills.
Summary: Have Multiple Wills for Foreign Assets Prepared
For individuals with assets in different jurisdictions, dual wills represent a practical solution to navigate the complexities of estate planning. By distinguishing between intangible and tangible assets, and by specifying the jurisdiction governing each type, multiple wills ensure that the distribution of assets adheres to local laws and regulations. While the process may be slightly more involved and may incur additional costs, the benefits in terms of legal compliance, streamlined probate, and privacy protection make dual wills a valuable tool in multijurisdictional estate planning. To embark on this path, consulting with experienced estate planning lawyers is not only advisable but essential to ensure a well-structured and legally sound estate plan.