Writing a will is a practical and integral part of wealth planning. It ensures your estate is distributed according to your wishes. If you're an expat or don't reside in your home country, this process can be very complex.
Your citizenship and where you live, work or own property and assets will affect your existing estate plan. And because inheritance and estate laws vary around the world, it's critical that your wills - if you draft multiple versions for different jurisdictions - are in alignment with one another.
Not having an updated will can make estate administration difficult and expensive. Use this checklist to help you stay organised but keep in mind it's not exhaustive. There may be other things to consider depending on your situation.
When estate planning, it's important that you take appropriate professional advice from a reputable law firm that specialises in international tax, trust and estate planning. Your bank or tax advisor can also support you.
You first need to name an executor of the will. This person will carry out the instructions laid out in the legally binding document. While married couples will often act as each other's sole executor, nominating more than one executor is common. If you forget to update your will and the sole executor isn't available anymore, the courts would have to appoint an executor for you - usually a solicitor - at your cost. It's best to avoid this step as it's not the most ideal situation.
Will the executor be on hand (and in the same time zone) to deal with the instructions within the will? Complications could arise if you appoint someone living overseas as executor. It could also be expensive and create delays. In Canada, for example, your estate could be deemed as "non-resident" for tax purposes if it's overseen by an executor outside of Canada.
A power of attorney is a legally binding right given to a trusted individual who will act on your behalf if you're physically or mentally incapable of doing so yourself, or if you no longer want to make your own decisions. Unlike an executor, who manages your entire estate when you die, you can specify which responsibilities you want to include in the power of attorney, and the person you appoint can exercise these rights when it's deemed necessary. A power of attorney document can also include medical directives and it ends at death (if it's not instructed to end sooner).
Naming a permanent legal guardian is absolutely essential if you have young children and you're living outside your home country. If you fail to name a guardian and something happens to you or your spouse, you're leaving one of the most important decisions about your children up to the courts.
Because you're considering who will raise your child in your absence, this is a very personal decision. You'll have to factor in a few things about your child's guardian, such as their age, where they live and whether they share your values.
Like with an executor, there's usually no limit to how many guardians you can appoint, but you should name at least one back-up.
Make sure your guardians, both permanent and temporary, understand what will be expected of them if they accept their roles.
Global families must consider whether their children will need to move country to be with the appointed guardian (and whether the courts would even allow them to be relocated). If a foreign national is named as the permanent guardian, their non-residency may disqualify them.
The role of a temporary guardian lasts until the permanent guardian can be with your children. This is especially important if the permanent guardian lives overseas and will take some time to come over to take custody of your children.
Many people leave cash gifts to secondary beneficiaries. The tax consequence could differ depending on whether you spread the gift out over the course of a few years, or leave it in the will. Cash gifts can often be tax free up to a certain amount, so you might want to factor that into your planning.
Estate tax laws vary by country, so it's a good idea to speak to a specialised tax lawyer about this, especially if the cash gift is substantial.
Beneficiaries are people or organisations named in the will to receive a portion of the estate. Charities can be beneficiaries, as well as churches or a club. Despite popular belief, an 'heir' to an estate is not the same thing as a beneficiary. An heir refers to a blood relative who may be entitled to the estate, but they're not considered a beneficiary unless they're named in the will. The executor of the will can also be the beneficiary if there's no conflict of interest.
It's possible to bequeath assets to overseas beneficiaries but it could raise tax issues and present legal difficulties. This is where you'll need the help of someone who understands the laws in both countries.
Your company is your pride and joy. You built it from the ground up. That's why, if its continuity matters to you, you need to create an exit plan to keep the business thriving even without you. Who will take over if anything happens to you? Do you have a partner you'll put in charge, or will the executor have to decide whether to close your business down or sell it?
Research shows that many businesses suffer for years in this scenario. Whether it's the loss of a stellar salesperson or a blow to employee morale, many businesses lose up to 60% of their sales and more than 15% of its staff following the death of a founder.1
The value of your company is part of your estate, to be distributed to your beneficiaries. Failing to name a beneficiary for your business could mean that this part of your estate will be subject to probate laws, which in turn could lead to the business being split up to distribute the assets to multiple beneficiaries.
At HSBC, we can offer you access to a team of investment, mortgage and insurance experts so you can develop your wealth strategies, including legacy planning.
For some of us, our pets are part of the family. In the eyes of the court, however, pets are considered to be property and therefore part of an estate. You can't leave money or assets for your pet in your will, so providing for them means finding someone who will take care of them for you.
The American Society for the Prevention of Cruelty to Animals (ASPCA) recommends an emergency plan. Keep vet records up to date and stock up on food and any medications. Microchipping your pet could also mean the difference between your trusted companion ending up in a shelter or being re-homed with family members.
Many pet owners leave a cash gift for caretakers or would have a pet trust set up. If you don't appoint a guardian, the courts will likely decide where your pet will go.
While technically not legally binding, your letter of final wishes will likely be the most personal document to include in your will. This is where you express your funeral arrangements or explain the decisions you made in your will. You can even write your own obituary.
According to Farewill, an online will service in the UK, the most popular song to be requested at funerals is "Bohemian Rhapsody" by Queen. 2 For those who want to be remembered in joy rather than in sorrow, it's not uncommon for them to bequeath a "depart-y fund" to friends, so they can throw one last party in the departed's honour.
If you're an expat with foreign assets or complex estates, you may benefit from discussing estate planning matters with a professional. You need to know which laws will govern your estate plan. If you're drafting multiple wills, take care to ensure they don't conflict with each other.
Learn more about managing your international wealth
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1 When Founders Die, Businesses Suffer, Business News Daily, May 12, 2020
2 We read thousands of wills and this is what we learned. Farewill.com, Dec. 2019