When estate planning, British expatriates in Portugal should consider the inheritance laws of both countries, the location of their assets and the tax implications.
Is one will enough?
It can be a good idea for expatriates to have two wills – a UK will for assets based there and another for assets in Portugal. This applies even if you live in Portugal part-time or have a holiday home, as it is much easier to wind up an estate using a local will than one established elsewhere. If you have assets in another territory, it may also be worthwhile setting up a will there.
While a UK will can be effective in Portugal, following the UK probate process it must be translated and notarised before going through probate in Portugal. Highly drawn-out and costly, this scenario can be avoided by having separate wills in place.
Note that UK wills usually include a provision to automatically revoke all earlier wills. If you make a Portuguese will, then change your UK one, make sure your solicitor knows about your Portuguese will to avoid invalidating it unintentionally.
Will UK or Portuguese rules affect you?
Inheritance laws in the UK and Portugal are very different and many expatriates are not aware that the default rules in Portugal recently changed. Before August 2015, Portuguese law automatically applied the law of your nationality to your will. For UK expatriates, this meant you could specify who received your estate, overriding Portuguese ‘forced heirship’ rules.
Now, however, under the ‘Brussels IV’ EU regulation, the laws of your resident country will automatically apply. So if your will was drafted before mid-2015, your assets may not be distributed as you intended. If you are Portuguese resident, by default your children and spouse could inherit at least half of your estate, whatever your will states.
You still have the freedom to nominate UK law, but you must now state this in your will. Professional advice is crucial, however, as this approach is complex, with potentially unwelcome tax implications. You should review the full range of options to achieve your estate planning objectives.
Take specialist, personalised advice to make sure you have appropriate arrangements in place. This can ensure not only that your legacy ends up in the right hands, but that your assets are structured in a way to limit the tax bill for your heirs.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website: www.blevinsfranks.com
By Gavin Scott, Senior Partner, Blevins Franks