Families who bought properties overseas, either for personal or investment use, need to carefully plan how they will pass on those assets when they die, or risk unforeseen outcomes and hefty taxes.<\/p>\n
It\u2019s not just the high net worth bracket of families who are affected. A flood of overseas property-buying in the 1990s and since means we are now looking at the first generation of many Irish families who are facing the challenge of how to pass on an overseas property. <\/p>\n
\u201cIt\u2019s very prevalent for very ordinary families to have this complexity,\u201d says Emma Heron, head of Whitney Moore\u2019s private client department.<\/p>\n
Returning Irish expats who hold foreign assets, property or otherwise, also need to consider their succession planning. <\/p>\n
So what do families need to know?<\/p>\n
[\u00a0Why are people in Ireland so reluctant to make a will? Here\u2019s what you need to knowOpens in new window<\/a>\u00a0]<\/p>\n First off, it\u2019s important to understand what you don\u2019t know. As Heron notes, one school of thought from a person leaving property behind can be \u201cwell I\u2019ll be gone\u201d, so they don\u2019t really want to think about it. But they might also be planning their estate on false assumptions.<\/p>\n As Heron says, some people assume that EU succession rules, in place in Spain and France for example, also apply here, or that because they live in Ireland, such rules don\u2019t apply to them. <\/p>\n Some people might think they don\u2019t fit in the wealthier cohort who would need inheritance tax planning.<\/p>\n \u201cIt\u2019s probably an illusion among people that it really only affects ultra-high-net-worth families,\u201d says Heron.<\/p>\n It could be someone who doesn\u2019t think they\u2019re particularly internationally mobile. They might have a business here, a holiday home abroad, and children scattered around the world. <\/p>\n \u201cThat\u2019s who it catches \u2013 and it\u2019s a lot of families in Ireland,\u201d says Heron. And it\u2019s bringing complications. <\/p>\n Foreign law<\/p>\n A common example, says Heron, is where a couple leaves their holiday home in France or Spain to each other, thinking that their Irish will \u201dstretches across the border\u201d.<\/p>\n However, as Heron points out, that \u201dwon\u2019t necessarily\u201d be the case. So, they might find that their Irish will only deals with Irish assets, which can result in unintended beneficiaries, unfamiliar systems and delays in probate. <\/p>\n And if a person who dies owned a business, \u201cit can lead to disruption in the business that no one foresaw\u201d, as their successors have to sort out the foreign property issue.<\/p>\n Even where the process does run smoothly, be prepared for extra work and delays.<\/p>\n Gillian McGough, an associate solicitor with McElhinney & Associates in Co Donegal, cites a recent example of a client with a property in Spain. <\/p>\n \u2018If you can do it when it\u2019s not at a crisis point, or under pressure, or at a time of bereavement, it\u2019s calmer, it\u2019s easier and it\u2019s done better. It can be so problematic afterwards\u2019<\/p>\n \u2014 \u00a0Emma Heron of Whitney Moore, on planning ahead for succession<\/p>\n The client had set out her plans for all her assets in her Irish will, and the distribution of those assets went smoothly upon her death. However, dealing with the Spanish property was delayed until after her Irish estate was sorted out, and the process also required translation of relevant legal documents etc.<\/p>\n So homeowners need to do their homework. Do forced heirship rules apply in the jurisdiction abroad where they hold property, for example? Do these rules suit, or do they need a will setting out their wishes? <\/p>\n Taxes are another part of this, and you might need to check out whether a double taxation agreement between Ireland and the country where your property is located is in place.<\/p>\n Irish capital acquisitions tax (CAT) will apply if any of the following three scenarios applies: a person leaving an asset is resident in Ireland; a beneficiary is resident in Ireland; or a property is located in Ireland. <\/p>\n Some jurisdictions tax the estate, for example, though most in Europe tax the beneficiary, as happens in Ireland.<\/p>\n Consider Spain. As Ireland did not adopt the EU succession regulations, but Spain did, that country can decide upon your death whether Irish or Spanish law applies if you hold a home there. <\/p>\n Depending on the circumstances of your death, it could be the case that Spanish rule applies. <\/p>\n