Final Will
 

Hi,
We have lived in the USA almost 2 years and plan to stay forever. We own a house in the USA with a mortgage and also one in the UK (no mortgage). We are married with 3 children.
We have a Will in the UK, but need one for our USA property.
Will a new USA Will override the UK one, can we add the USA property to the UK Will, or add the UK one to the USA Will?
I have asked the Attorney here who said it would cost $500 for 2 wills and they would discuss once we go in to do it, but online Wills are much cheaper but given we have this scenario we may be best to use Attorney?
Thanks!

Re: Final Will
 

Given that sums involved in 2 houses, $500 seems like a bargain to make sure it's all done right. You'll have hundreds of thousands of dollars of assets in the will (maybe more) and it's complicated by two different countries so I'd definitely suggest using an attorney for this.

Re: Final Will
 

It is apparently common practice to have two wills, one for each country, but generally any new will voids any and all previous wills. If you are leaving things to the same beneficiaries, e.g. divided equally between your children, the risks are small, but a bene ONLY of the later will could try to void the earlier one and claim all or part of the estate specified in the earlier will. Tread with caution!

Re: Final Will
 

There is a common misconception here that a separate will is needed for each country. Not so. A will be admitted to probate in the state of the decedant's last residence. That said, the will itself must be valid at the place of execution.

Now, if there is real property involved and it is located in the jurisdiction other than the place of last residence, an "ancillary" probate will be necessary in the location of the real property.

We need not get into inter vivos trusts [aka "living wills"] which are common these days.

Re: Final Will
 

The idea of needing two wills is forum myth - normally it's unnecessary and is usually a really bad idea.

Normally, you have a will in your jurisdiction of permanent residence. If you have assets somewhere else, a non-local will can normally be accepted for probate or equivalent process in another jurisdiction. Only if your primary will is not acceptable in a jurisdiction where you have assets, should you consider a secondary will.

Re: Final Will
 

Agreed 100%. If that wasn't clear in my post above, that was my fault. Yes, I agree, two wills is a plain "bad idea".
Agreed.

Re: Final Will
 

Have you thought about selling the house in the U.K., assuming you have a green card or U.S. citizenship and are sure you can remain?

Normally (check with a tax professional) you are exempt the capital gain up to $500k (filing married/joint) as long as you sell within 3 years of it ceasing to be your main home. If that's the case there may be a significant tax opportunity open to you in the short term. You might have to pay some U.K. gains tax related to the time it wasn't your residence (also check with a U.K. tax professional) but it may still be a good decision.

Also - it makes future estate issues, including (U.K.) Inheritance Tax, much simpler. Divesting of U.K. assets is not only a strong indicator of becoming non-domiciled but also reduces the risk of any probate in the U.K. (which is why you need a USA will), ensuring that there will never even be a question asked about your former U.K. domicile when your estate is dealt with.

Re: Final Will
 

I am in the process of sorting out wills. My solicitor back in the UK recommended that I have two wills. One for assets in the UK with a UK executor and one in the US (written by a US attorney) for my US assets with a US based executor. I have a house and savings accounts in both countries.
Now people here are saying that is a bad idea.. where one might have got that advice?

Re: Final Will
 

It is normally a bad idea to have more than one will because that can lead to confusion.

If you do have more than one will then it is very important that they are both worded very carefully and are very clear about which assets they cover and do not cover.

In practice, if you are just leaving everything to the same beneficiary in both wills it probably won't be an issue. but if there are different beneficiaries, or you later update one will but not the other, or if some asset is covered by both wills (or by neither) then there could be issues.

Since you don't need more than one will why would you want to have more than one?

Re: Final Will
 

What about executors? My solicitor advised having different executors since I think the US has different obligations to the UK. A US attorney will probably not want or be able to advise a UK executor on how to handle a UK will and vice versa. My solicitor warned me that although he could make a single will covering both nations he could only make it according to UK law which may or may not conflict with US practices.

Re: Final Will
 

It should normally be possible to probate a U.S. state will (California, for example) in England and Wales. Ask your solicitor why he or she thinks this isn't a good strategy.

One obvious reason (not to have two wills) is that having two wills carries the risk of one contradicting the other, also makes updates more complicated.

Another reason is that normally you want to keep your non-U.K. assets out of inheritance tax, to do that you have to become non-domiciled. Keeping a U.K. will makes this more difficult to establish.

Also note that each state in the U.S. is a different legal jurisdiction for probate purposes, as Scotland and Northern Ireland are different from England and Wales. Even in the U.K. it's possible to have assets covering three jurisdictions. Would your solicitor propose having three different U.K. wills if that applied?

Re: Final Will
 

JAJ Thanks for your comments. I will certainly ask my solicitor about this more. Between this and taxes I feel paralysed. Every time I try to get professional help I get contradictory information (with sound logic). Everyone both pro and amateur seems to have something to say and valid points in many cases.
For instance in the US I have been told that it is most prudent to put all my major assets (house for example) into a trust rather than a will. I believe this works best for tax purposes and also helps prevent confusion or contesting of a will. My solicitor advised that in the UK this is not necessarily the best course unless you have specific requirements (ie. have beneficiaries that might start fighting over your dead body and assets). :)

Re: Final Will
 

A Trust is certainly an option to explore and may or may not be suitable to all and to all circumstances, besides different tax consequences can apply.

keep in mind, in the US the Title often determines survivorship rights and interest in a property (and in many states supersede a will) so its important to ensure they match and correlate with the intent of final wishes ... that is often where most disputes arise.

Re: Final Will
 

There aren't any tax benefits for a living trust in the US plus a living trust has to be constantly updated (it should reflect current assets otherwise it could cause complications). Also there are considerations such as 401Ks, IRAs, etc. that shouldn't be put into a living trust since they may be taxed immediately. In a living trust, you have to transfer deeds to the beneficiaries and if you sell, you have to transfer deeds back to yourself and make a new living trust. For a Last Will and Testament, you usually just divide assets by percentages.

In most cases, a living trust can cause more problems than it solves. Normally the main advantages of a living trust is that they are harder to contest and usually doesn't require probate if uncontested. However if a Last Will is uncontested, usually probate is fairly simple. Not only is a Living Trust more expensive, you also have the cost of transferring deeds and keeping the Living Trust up to date.

Also as JAJ stated, if you plan to sell you UK home in the future, you may want to sell it before 3 years since US tax code allows a $500K capital gains exclusion for married filing jointly if it was your primary residence for 2 of the past 5 years. If sold after 3 years, gains will be taxed at the US long term capital gains rate.

Re: Final Will
 

Professionals (including lawyers and accountants) usually operate with one of three mindsets towards their clients - salesman, expert, or teacher. Normally, you want one in the third category. In other words, helps to explain the pros and cons of different courses of action so that you end up understanding why a particular option is best compared to the alternatives.

In general, a trust is a legal device to split the legal ownership of an asset from the benefits of ownership. For example - in the case of a house, the legal ownership is based on the title, while the benefits of ownership normally constitute the right to live in the property or collect rental income.

There are many different kinds of trusts, all with different legal and tax consequences. It gets complex quickly. The following is from the California State Bar:
http://www.calbar.ca.gov/Public/Pamp...vingTrust.aspx

Anecdotally, trusts are greatly oversold in the United States to those who do not need them. A revocable living trust does not give you any tax saving, and the one about the will being contested has the qualities of myth about it. As long as the will is clearly drafted, the courts are in general very reluctant to overturn it.

And even if you have a living trust - you still need a will.


Your solicitor is correct. Unless there are some specific requirements to have a trust, you normally don't need one. At a minimum, before you set one up you need to understand why. And as a United States citizen/resident, if you set up or otherwise deal with a foreign trust, you need to understand the U.S. tax consequences and reporting required (form 3520). The same would apply if you were in the future a resident of another country with a U.S. trust - you'd have to understand that country's tax requirements.