JinxyCat

Hi all,

Sorry if this has been asked before, but I did a search and couldn't find anything. Currently neither I nor DH has a valid will (not been updated since DS1 was born) and I'd like to resolve that asap.

We are currently going through the greencard process (just started) so intending on being in the US for a while, don't currently own property in US but are looking to buy in the next year or so. However, we do own stocks & shares in the UK, as well as property.

We have two kids together, and DH has a daughter from a previous relationship who we want to make sure is taken care of if the worst happens.

We have agreed with BiL that he will be guardian of our boys, so that's sorted.

Does anyone have a view on whether I need to do a will in the UK, and if it will be valid for the US if I'm not resident in the UK - or if I have to do it with a US lawyer?

Thanks for any/all advice!

JinxyCat

We are in Arizona, in case that makes a difference...

hungryhorace

You should have a will drawn up in the country where you are currently resident. If you change residencies, update your will as appropriate.

Yorkieabroad

I was just in seeing an attorney yesterday about updating ours. She mentioned that it was a good job we were citizens because while there are generous IHT allowances for citizens, the rules are pretty punitive for residents who are not citizens. I wasn't really paying much attention as it wasn't relative to us, and someone may be along shortly who knows quite how punitive they are, but in the meantime, I think it suffices to suggest getting it sorted asap to minimize any potential impact.

md95065

You should consult with a local attorney to find out what you need to do in order to have a valid will in AZ. That is particularly important when it comes to the issue of the custody of your minor children. Simply "having an agreement with your brother in law" isn't enough - you need to find out what paperwork needs to be in place that will allow your brother in law to carry out your wishes and, presumably, remove the children from the jurisdiction of the local courts and the US.

Steve_

You need to talk to estate attorneys about this. It really is genuinely too complex to go through on an internet forum and mistakes are easily made.

However, what I would say is that you need a will that complies with the laws of any jurisdictions where you have interests. You can have one document which is essentially two wills, one written for Arizona and one written for the UK. A probate court in Arizona will be responsible for anything in Arizona and a UK court for anything physical in the UK - make sure they do not cover the same things, that causes confusion.

Say you have two properties, one in the UK and one in Arizona and you hold things like stocks and bonds, the probate court where you reside will be responsible for the stocks and bonds and the real property in the jurisdiction where you reside. But you need something to deal with the other property.

Also, bear in mind that residency for estate tax purposes is VERY different than for income tax purposes. The standard exemption for non-resident aliens in the US is only $60,000 for example. Although the US has loads of income tax treaties with other countries, it doesn't have many estate tax treaties and I have no clue what the UK one says, but it is VERY important to claim the tax treaty provisions on IRS form 706 and form 8833 during administration of the estate.

Another thing that trips people up are powers of attorney, the way of doing this is totally different in the UK than from Arizona. In Arizona it's called a "durable power of attorney" and there is a standard wording that has to be countersigned by a notary public, however the UK has a much more complicated system involving references. You have to do both because an Arizona power of attorney has no standing in the UK.

If you have children, bear in mind their age, you cannot compel them by a Will to go and live with your brother-in-law, that has to be decided by them and also Child Protective Services. (Which in Arizona, is notoriously crap).

The Child Act in the UK also has a bearing.

Also, Arizona requires a surety bond, so you need to waive that in the wording of the Will.

So... to summarize... get a bloody good lawyer who has done it before...

Steve_

The estate tax limit in the US is $5.25 million for individuals, double for married couples. However, to stop rich people fiddling the system with mail order brides, it doesn't include the LPR spouse of a US citizen unless they've been married for x number of years, I'm sure someone else knows the details.

However the estate tax limit for non-resident aliens is only $60,000 (unless altered by treaty), plus many jurisdictions (but not Arizona) have their own estate taxes. There used to be a thing called the "pick up" tax or whatever it was called, which basically meant the State could charge an estate tax up to a certain limit and that was an allowable deduction against federal estate tax, but it was scrapped by George W. around 2001. So now, States that charge the "pick up" rate in their State law get zero. But many States never changed their laws, so they may be listed as having an estate tax, but in reality they don't.

Steve_

Oh and another thing are the IRD rules. Which can lead to dual taxation of your heirs if you're not careful. Because of pensions. As I recall the UK taxes the pension (i.e. the decedent's money in a SIPP for example) at death, the US taxes the beneficiary who receives the income. So double taxation as you can't claim the UK tax as a credit against the IRD in the US (as the estate and the beneficiary are separate taxpayers).

As said, this is really complicated stuff and requires really careful planning and expertise.

S Folinsky

<sigh> There are some things mentioned in this thread that make me cringe a bit.

One thing that I can say is that having more than one will is definitely not a good idea. It is possible to have a will and a codicil [amendment] but if one is not careful, multiple testamentary documents can cause a bit of confusion especially considering the fact that the decedent is no longer able to fix things.

The general rule of "conflicts" is that that will is valid if valid under the the law of the place of execution. When it comes to probating the will [or otherwise administering the estate], the law of the place of residence at the time of death is what controls, including their conflicts law. [Within the United States, this is handled under the "full faith and credit" provision of the US Constitution. Between a US state and the UK, it would be handled under principles of "comity."].

As for administering estates, most property except real property is handled by the probate/administering estate in the residence at time of death, including non-real property outside of the jurisdiction. When it comes to real property, a "ancillary administration/probate" will have to be done in the place of the location of the realty.

Quite often, much property passes outside of wills, such as in trusts.

This post does not discuss taxes.

In order to determine what "exactly" has to be done, one should consult with an estate attorney, and it may be necessary to have coordination with a UK solicitor.

Steve_

It is not "definitely not" a good idea, I said one document that is essentially two Wills, what I meant was one Will written with two sections that separate it out. Do you have any real assets outside the US? The Will has to work for probate in more than one jurisdiction, so in essence you have one document but it has to clearly delineate what is what and covered by what law, real property for example has to go through probate in the jurisdiction where it is.

Yes, but a trust for US purposes may not be a good idea for other jurisdictions. The standard thing to do in the US is to put it into a trust, but trusts are taxable in other jurisdictions at possibly unfavourable rates, so that advice does not necessarily hold, plus you've got the IRD rules to think about.

Obviously you want to avoid conflicts if you possibly can.

Well taxes are the key point, because IHT in the UK for example kicks in at a pretty low level - which is why it is important to have the Will clearly delineate what is where, because HMRC in the past have used some fairly expansive definitions to get IHT to apply to it. Like I said, residency for estate taxes is totally different.

There are people who specialize in it, whether you need one depends on how complex it turns out to be.

JinxyCat

Thanks for all the advice, it appears to be insanely complicated but I will contact an estate attorney - whatever one of those may be - and will much off the process.

The thing about the kids not going to the appointed guardian (my BiL) without the approval of child services is worrying, will make sure to get that covered with the attorney too. I just assumed that if someone was named as a legal guardian (via a valid will) that the kids would naturally go to them as it reduces the burden on the state. Clearly a wrong assumption - good to know.

Thanks for all this, really appreciate it!

Yorkieabroad

As I mentioned earlier, I am getting our Wills / Trusts restructured at the moment, so I asked my attorney the direct question about the Childrens guardian situation. This is her reply:-
QuoteUnquote.

This is in Texas - I don't know if residency elsewhere may have a different result.

Steve_

Not that CPS would be awkward about it, I think it's more a case of, CPS is buried in too much work and your kids could end up with a foster family until they get around to it. Plus the person being in another country adds to the complication too.

Anyway as said, this is a broad subject with all kinds of pitfalls that are not immediately obvious. If you've got an international dimension to your Will, a boilerplate approach is not advisable.