Planning your legacy in an interconnected world

While most high-net-worth individuals (HNWI) hold their assets in one country, there is a growing trend of international asset diversification. A study conducted by Owner. One found that 24% of the HNWI surveyed spread their assets across two countries, and 22% across three or four¹. While this may be enticing, it also brings about unique cross-border estate planning challenges.

Cross-border estate planning requires careful consideration of different legal systems, tax laws and cultural norms, each with its own intricacies. For instance, inheritance laws in France may mandate a specific distribution of assets among children first. However, in the U.S. and the UK, differing interpretations of legal concepts like "trust" could lead to unintended consequences and conflicts in how an estate is administered.

That’s why proactive planning is essential to navigate this complexity. A well-structured international estate plan safeguards your wealth and ensures your wishes are honoured, no matter where your assets reside. This not only provides you with peace of mind but also paves the way for a smooth transition of your legacy to future generations.

Understanding the cross-border estate planning landscape

Before embarking on your estate planning journey, it's crucial to understand the key elements that shape this landscape: 

- Situs of assets: The location of your properties and investments influences how they are treated during succession.
- Forced heirship rules: Certain countries have laws that dictate how your assets must be distributed, regardless of your personal wishes.

Navigating specific challenges

Certain aspects of international estate planning also demand specialised attention. For instance, businesses and real estate held across borders present unique challenges.

- Business ownership: Transferring ownership of a business across borders can be complex due to varying legal structures and registration requirements in different countries. Ensuring business continuity can also be challenging, as different jurisdictions may have different rules regarding succession planning and the transfer of management responsibilities.
- Real estate ownership: Owning real estate in multiple countries raises questions about the most suitable ownership structure to minimise tax liabilities and comply with local inheritance laws. For example, some countries may have restrictions on foreign ownership of property, or may impose higher taxes on non-residents.

In both cases, it’s essential to understand the nuances of each jurisdiction ahead of time to avoid potential disputes, and to ensure a smooth transition of your assets.

Planning to build your cross-border estate plan

Engage legal and financial professionals with expertise in international law and taxation to build a robust cross-border estate plan. Start planning by creating a comprehensive inventory of your worldwide assets, including real estate, financial accounts, business interests and personal possessions.

When deciding how to structure your estate plan, there are a few options. Take the following two for example:

- Will: A Will is a legal document that outlines your wishes for the distribution of your assets after your death. It provides clear instructions and can help minimise potential disputes among beneficiaries.
- Trust: A trust is a legal arrangement where a trustee holds and manages assets for the benefit of designated beneficiaries. It offers greater flexibility for managing assets during your lifetime and beyond, with potential tax advantages.

Both options have their own advantages and disadvantages, depending on your needs and personal circumstances. It’s also worth exploring options like foreign trusts, holding companies or life insurance, to further mitigate tax burdens and streamline the transfer of your wealth.

Failing to consider these factors could lead to potential pitfalls such as double taxation, conflicting legal claims and lengthy probate delays. Therefore, to avoid these complexities, it's essential to seek information and analysis from highly-experienced advisers, who can provide you with the clarity and guidance required. 

Staying ahead of the curve

International estate planning is not a one-time event; it requires ongoing review and adaptation to keep pace with your evolving circumstances and the ever-changing global landscape. Here's how to stay ahead of the curve:

- Regularly review your plan: Revisit your plan periodically to ensure it remains aligned with your current financial situation, family structure and personal wishes. Additionally, keep abreast of any changes in global laws that may affect your estate.
- Consider the impact of geopolitical events: Political instability, economic shifts, or changes in tax treaties can all necessitate adjustments to your plan. Stay informed about these developments to safeguard your assets and your family's future.
- Seek ongoing professional guidance: Maintaining relationships with trusted legal and financial advisers is invaluable. They can provide expert insights, keep you informed about relevant changes and help you navigate the complexities of international estate planning.

Your cross-border legacy starts here

In essence, cross-border estate planning presents complexities, but proactive planning is the solution. A well-structured plan ensures your wealth is protected and your wishes are fulfilled, providing peace of mind for you and your loved ones. Don't let the challenges deter you from taking the first steps in securing your global legacy.

At St. James's Place, our experienced advisers can help you navigate the intricacies of international estate planning in Singapore. We provide personalised guidance and support for your planning needs, as well as other services, such as portfolio diversification and asset allocation strategies, tailored to your unique goals. Contact us to schedule a consultation and embark on your cross-border legacy planning journey today.

This article is a general communication that is provided for informational purposes only. It should not be relied upon as financial advice, and it does not constitute a recommendation, an offer or solicitation. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances. You are advised to seek independent tax advice from suitably qualified professionals before making any decision as to the tax implications of any investment.

Please note that advice relating to a Will and/or trust involves the referral to a service that is separate and distinct to those offered by St. James’s Place.

 

Source:

¹Many Wealthy Individuals Still Concentrate Assets in One Country Despite Global Diversification Trends, Hubbis, 2024