FOSSUK Retirement and Estate PlanningSwiss-UK Cross Border Estate Planning – UK Perspective

Andrew Goodman

osborneclarke.com

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Introduction

1. English Cross-Border Estate Principles

2. Application of English Law

3. UK Inheritance tax

4. Planning Strategies under the new regime

5. Lasting Powers of Attorney

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English Cross-Border Estate Principles

England & Wales

Basis Testamentary freedom

Connecting factors Domicile in the common law sense and Situs

Law governing the estate UK domiciliary all assets ˃ English law UK real estate > English lawForeign domiciliary All others > Law of domicile

Form of will English > Signature of testator & two witnessesForeign > Recognised in most cases

Estate administration Executors and Grant of Probate / Administration

Intestacy rules (family) £250,000 + possessions + ½ residue to spouseBalance split between children outright

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Application of English Law

Example: UK resident Swiss citizen with UK and Swiss property and bank accounts

1.Probate / administration obtained in England

2.Joint property passes automatically to the survivor

3.Apply the relevant marital regime (if any) to divide the assets

4.Deceased has a (common law) domicile in Switzerland but (civil) domicile in England.

5.The conflict is resolved in favour of Swiss law applying

UK Property – always English law (complete testamentary freedom)

All other property – Swiss law (forced heirship regime)

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UK Inheritance Tax

United Kingdom

Application UK domicile > worldwide / Non-UK domicile > UK only

Gifts Gifts made during the last seven years of life

Rates Nil rate band of £325,000 then 40% on estateEffective £650,000 for married coupleExtension of nil-rate band to £500,000 (£1m) for home from 2020

Exemptions Transfers to spouse or charityAll non-UK assets/gifts for foreign domiciliaryRegular gifts of excess income

Reliefs 100% relief for business assets held for 2 years50/100% relief for agricultural land held 2/7 years

Foreign credits Estate tax treaty with Switzerland + Unilateral relief

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Planning strategies

Planning opportunities are diminishing

1.Lifetime gifts (beware anti-avoidance)

2.Move assets / cash outside of the UK

3.Excluded property settlements prior to 15th year of residence

4.Buy with debt – bank or family finance

5.Life insurance written in trust

6.Hold UK assets (other than residential property) via a foreign company

7.Use business / agricultural reliefs

FOSSUK Retirement and Estate PlanningSwiss-UK Cross Border Estate Planning – UK Perspective

Andrew Goodman