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Viewing posts categorised under: Wills

Do I need a different Will as an expat living in Italy?

By Gareth Horsfall - Topics: Italy, UK bank accounts, Wills
This article is published on: 24th November 2021

24.11.21

Here I am again after a recent trip to the UK. I am pretty sure the whole affair of travelling internationally with a family during Covid restrictions has taken 10 years off my life. What a nightmare! The evening before we flew to the UK I spent 5 hours in front of the computer trying to work out which forms were needed, for when, and which Covid tests would be required, and when. We also had to spend approx £150 on Covid tests to travel. I have spoken to many people who have had a similar experience. The whole process was not aided by the fact that we were diverted through Barcelona because the direct flight to London had been cancelled, and even transitioning means that the necessary Covid protocols must be adhered to in the transiting country as well. Despite the administrative and logistical headache of planning all this pre-journey, the actual trip itself went well.

Wills in Italy

So, after surviving that experience and deciding not to travel outside Italian borders again until it starts to eventually settle down, I got called to another meeting in Barcelona in December. I will have to go through it all over again!

Anyway, after all that I thought I would write about something which is ordinarily outside my field of expertise in this Ezine: making a will. I haven’t touched on this subject for some time, but recently we have teamed up with another International lawyer called Jessica Zama of Buckles solicitors. She is British/Italian and is well versed in the world of whether to make a will in Italy or not, and not just for Brits. I asked her to write a piece that I could share with you about the importance of making a will in Italy when you have assets in the country, i.e. a property in most cases, which I have copied below.

However, before I get into that I wanted to write about a couple of other things which may come in useful if you need to travel, post-Brexit banking arrangements in the UK and a new Italian website that might come in handy.

Travel Insurance

Travel Insurance
I myself used to have travel insurance through a UK firm, pre Covid, pre-Brexit. This firm no longer offers insurance to EU resident individuals due to Brexit so before my trip to the UK I needed to shop around to find a cost effective option. Unfortunately, it was quite difficult to find a solution that wasn’t going to cost the earth. The usual Italian market suspects (Generali, Allianz, Zurich, Unipol) etc were rather more than I wanted to pay. However, on doing some research I stumbled into my favourite comparison website: facile.it It was there that I discovered that they were offering travel insurance packages from a French firm ‘InterMutuelles Assistance’.

One of my colleagues in France informed me that MAIF, MACIF and MATMUT are big French insurers and this firm is a part of the group, so likely to be a solid firm.

The French company is merely using its European license to passport its services into other EU states, in much the way that the UK firm I used to buy travel insurance from used to do. So, I wanted to communicate that there are lower cost more competitive options in the market place. This is by no means the only option and I would urge you to do your own research if you require travel insurance, but if you are interested you can find them under their brand in Italy:
www.traveleasy.it/

UK Banks closed

UK banking arrangements
A lot of my clients who are UK account holders with Natwest have now received a letter informing them that likely action to close their account will take place before the end of 2021, as a result of Brexit, and the fact that Italy has been very clear (as early as April 2020. See document HERE) that they do not want non-Italian, non-EU financial firms, advisories, or intermediaries operating on Italian soil or for Italian resident individuals. Italy, along with the Netherlands, seem to have the most strict measures in place, and it would appear that in both cases accounts of clients of Natwest are now being shut down, if they haven’t done so already.

This obviously leads to the question, what can you do for continuation of banking services in GBP? Thankfully in the last few years with the development of the Fintech industry, a myriad of options have arisen. The most popular seems to be Wise (formerly Transferwise) who are offering not just currency exchange services, but different currency accounts through which you can move money. Wise are not a bank, so you may be restricted on exactly what you can do and who can send money to that account, but it does work for some. I myself use Fineco bank in Italy and they provide current account holders with EUR, GBP and USD accounts, to which money can be sent, and then moving money between one and the other does not attract any currency conversion costs. There are also a number of online banks and services offering these options and so you shouldn’t be short of options.

The only problem
There is however one area which may still cause an issue if your UK account is closed down. UK direct debits. I myself have not been contacted yet to close my First Direct account in the UK, but should it happen it would cause a very big problem as I have a number of insurances which I took out years ago in the UK that provide protection for me and my family. However, they only accept payment through direct debit on a UK account. Should my banking services be pulled I may find myself losing my insurance. You may find yourself in a similar situation with UK direct debits. In this situation, there really is not a lot you can do about it, I am afraid.

But moving on from banking arrangements, I want to now lead into the idea of making a will in Italy. It still surprises me how many people have not done so yet. I understand it is one of those ‘to do’ list items, but the truth of the matter is that it shouldn’t be. It should be a priority item. To die, leaving an asset such as a property in Italy, without clear instructions as to how you want this asset to be treated, could create all sorts of complications for your family and/or beneficiaries. I made my will a few years ago now and whilst it probably needs updating again, I know that I have a valid Italian will in place in the event of my death.

So without further ado I am passing to the words of Jessica Zama, who wrote the following piece, and which I hope spurs you into making your own will if you have not already done so.

A very useful Italian website
From the 15th November a new Italian government website has been launched called ‘Anagrafe Nazionale Popolazione Residente’ www.anagrafenazionale.interno.it/servizi-al-cittadino/ (ANPR for short).  It allows every Italian resident the ability to download all those certificates which traditionally you had to take an appointment at the comune, to attain.  As anyone who has lived in Italy long enough, at some point or another you will need one of the certificates, mentioned below, and since they only have a 6 monthly validity the fact that you can now easily download them online is fantastic.  Other services do exist, which I have used myself to avoid queuing at the comune offices, but they do charge a pretty penny for the service.  For the moment they are also free of charge through this website, and it is expected that this will be the case until the end of 2022, at which point you may be expected to pay just the ‘bollo’ at the point of download.   The certificates include:

  • Anagrafico di nascita;
  • Anagrafico di matrimonio;
  • di Cittadinanza;
  • di Esistenza in vita;
  • di Residenza;
  • di Stato civile;
  • di Stato di famiglia;
  • di Stato di famiglia e di stato civile;
  • di Residenza in convivenza;
  • di Stato di famiglia con rapporti di parentela;
  • di Stato libero;
  • Anagrafico di Unione Civile;
  • di Contratto di Convivenza.

To enter in the website you will need a SPID or Carta d’Identità Elettronica.

Wills for expats in france
Protecting your Italian assets – where there’s a will, there’s a way

If you hold assets located in Italy, it’s important to obtain legal advice to draw up a will that covers them, regardless of whether or not you live there.

There are several reasons for doing this. If you have any specific wishes relating to the distribution of your Italian assets following your death then you need to put them in writing, in a will that is considered legally valid in Italy.  If you do not have a valid will in place, your Italian estate will pass to the beneficiaries set by Italian law (in most cases the spouse and children).

The validity of your will in Italy is crucial, particularly if it is drafted and/or signed abroad and is to cover all your Italian assets, both present and future. For example, if you were to specify in your Italian will that you wish to leave a specific property in Italy to your wife, but this is then sold during your lifetime, your Italian will would not cover the proceeds of sale held in an Italian bank account.

Your will must also take into consideration the Italian inheritance laws and succession procedures. In Italy certain relatives, such as the spouse and children, have a right to a percentage of the deceased’s estate regardless of the terms of the will. This is known as forced heirship and it must be taken into consideration when drafting a will relating to Italian assets, as it can somewhat limit your testamentary freedom.

However, there may be the possibility to avoid this restriction by electing for the law of your country of nationality to apply to the will and the succession (thereby allowing for more freedom in disposing of your assets) although you would need legal advice on whether this can be applied in your case and how to draft your will so that the Italian forced heirship rules are avoided.

It is also important to consider the wording of the will and the legal terminology used within.  A will signed in another country may potentially cover all your worldwide assets, including your Italian assets, but its wording may cause issues regarding the administration of your Italian estate in the future. Therefore, once again it’s important to obtain legal advice on this subject.

When you also have a separate will which covers your assets in another country (even if this will excludes Italian assets), it’s important that your lawyer checks to ensure that there are no conflicts between the two wills which could render one or both invalid and thereby potentially leave your assets exposed in both countries.

Is it necessary to have a Spanish will and a British will?

By John Hayward - Topics: Spain, Spanish will, Wills
This article is published on: 9th February 2021

09.02.21

Dying without a will can have serious consequences for the people you care about, making it hard (or even impossible) for them to claim what is due to them. Even with a will there may not be enough detail as to what assets the deceased had, which is why it is vital to have to have a separate list of all your property including bank accounts and investments, as well as details for key contacts (lawyer, accountant, financial adviser).

Now we are talking about two different countries with two different sets of probate law and two different languages. Although you may hear of “international” wills, the fact is that there could be conflict with one will trying to deal with, effectively, two different estates.

What tends to put people off making a will is:
a) Writing a will makes the certainty of death even more so
b) Cost

If the cost is a problem (around €200 for Spanish will and £200 for an English will), it is important to think of the subsequent costs, inconvenience, trauma, and potential loss of assets, by not making a will. It is generally considered wise to have a Spanish will to cover Spanish property and a British will to look after everything else.

We can help you deal with both types of will and save those who you wish to benefit a whole lot of problems.

*Note that England and Wales, Northern Ireland, and Scotland have different processes

The folder…

By Chris Webb - Topics: Inheritance Tax, Madrid, Spain, Succession Planning, Wills
This article is published on: 10th August 2020

10.08.20

I´ve been playing around with this article during the past few days, trying to fill in some spare time during the weeks of this long hot summer we have here in Spain. I realised quite quickly that writing things that will be of genuine interest could be quite hard so for this article I´ve decided to share with you what I personally am doing at home right now.

Considering some limitations of movement right now it would be a great time to give this some thought.

One piece of advice I always give to my clients is to prepare “THE FOLDER”. You´re immediately wondering what I´m going on about, let me enlighten you to what it is and why you should do it.

For me personally I am reviewing my folder and checking its updated. Interestingly I needed to refer to my folder yesterday and realised I still had some older information on there which isn’t relevant anymore, so tonight’s job is to review and update.

There are many scenarios where you´ll be thankful for making the folder. When I moved house two years ago I went straight to the folder and had all of the companies contact information as well as policies or account details which made informing them all much easier, on the flip side I´ve also lost a family member where finding their folder reduced the stress in dealing with their estate.

In moments of stress you find yourself trawling through endless pieces of paperwork to ascertain assets and account details, then you get that lightbulb moment…….. why wasn’t it all documented.

The Folder | Chris Webb | Spectrum IFA Group

What is THE folder?
It is a single file (digital or physical) where you keep all your important personal and financial information together. It allows easy access to these documents if you’re no longer around to help. It is even more important to have it in place where one family member takes the lead on the family finances. That includes paying bills, managing accounts and storing documents.

As a family we decided to do both a physical folder and a digital folder. The digital folder is password protected, both me and the wife have access to this, and we have shared the password with close friends should anything happen to us. In the digital folder we have shared as much information as possible for all our assets.

For the physical folder it is vital to only list information that would not create a problem should that folder end up in the wrong hands. So, we have only listed the names, telephone numbers, policy / account numbers of all our assets in this folder. It would give enough information for someone to be able to deal with our affairs with minimum hassle.

Is it worth the effort?
Well, I think it is worth the effort. A time of loss can be stressful enough without having to try and piece together the deceased’s financial affairs. This can be a really difficult time for family members.

However, preparing THE folder is much more than avoiding stress; if you leave behind an administrative nightmare you could delay access to inheritors’ access to funds and potentially cost a small fortune in legal fees.

To give you an example of this, the UK Department of Work and Pensions estimate that there is currently more than £400 million sitting in unclaimed pensions pots in the UK. Imagine trying to find out if you have one.

chris webb Spectrum IFA

Which is best physical or digital?
As I mentioned, we have done both and I believe most people would do the same. Some people still love to have information in physical form, something you can get your hands on. The younger generation tend to rely solely on digital devices. I don’t think it matters which way you do it, as long as you do it.

What goes in the folder?
Its essential to list what assets you have, where they are and important contact information for each asset. Keep copies of any insurance policy documents, pension statements etc. I have put a small list below which would help most of you, but you do need to look at all your assets individually to make sure the list is right!

  • Life insurance policy documents
  • Personal pension documents
  • Employer pension details
  • Details of any entitlement to state pensions
  • List of bank accounts with account numbers, login details, passwords etc
  • Details of any credit cards
  • Property, land and cemetery deeds
  • Proof of loans made
  • Vehicle ownership documents
  • Stock certificates, brokerage accounts, investment platform details, online investment account details
  • Details of holdings of premium bonds, government bonds, investment bonds
  • Partnership and corporate operating/ownership agreements (including offshore companies)

How often should ‘THE’ folder be reviewed?
I would recommend reviewing the folder on an annual basis, but if you’re extra diligent with it you should review and update every time something changes. For example, if you change insurance companies then add the new details and delete the old. This is a continuous job, its not something you do once and never look at again.

Finally…
Tell someone about your folder. Someone needs to know you have made one and whether it´s digital or physical. There is very little point going to all this effort if know body knows it exists.

Now I´m off to review my own folder, and it needs reviewing. I noticed yesterday that whilst my financial assets are up to date, I haven’t updated our vehicle details and a few other things which had gone unnoticed. Lets do this!

If you have any questions about creating your own folder feel free to reach out!

The when I die folder

By Antony Poole - Topics: Inheritance Tax, Spain, Succession Planning, Wills
This article is published on: 7th July 2020

07.07.20

Discussing how to deal with “life after death” with loved ones is not an easy topic for most families, much less planning for it. While it may sound morbid, creating a “When I Die” folder will save loved ones time and money because nothing is more time consuming and agonizing than sorting through a month’s worth of mail, rifling through cabinets to locate a last will and testament and trying to sort out all the different policies that are accumulated through the years.

While you may be thinking, I don’t have so much that I require a folder. Actually, the opposite is true. A “When I Die” folder is about much more than you’re your assets; it should include debts, funeral and final disposition arrangements, passwords, and letters to loved ones, among other things. The difference between having your files organized or not is about more than just stress; leave behind a mess and it can delay inheritors’ access to funds and cause potentially high legal fees.

The ”When I die” folder can be a physical or digital folder that an individual or family keeps that contains important information that will be needed in the event that someone dies or becomes incapacitated. It serves an important, but often overlooked role in estate planning.

A good start to your folder can be found BELOW to enable you to start one for yourself or for a family member, please feel free to adapt it.

CLICK THE IMAGE BELOW TO DOWNLOAD YOUR COPY AND ORGANISE YOUR ‘FOLDER’

UK share portfolio

Should you require any help with estate planning please feel free to contact me:

Inheritance Planning & French Residency

By Occitanie - Topics: France, Inheritance Tax, Moving to France, Succession Planning, Tax, Wills
This article is published on: 9th June 2020

09.06.20

Welcome to ‘Spectrum in Occitanie, Finance in Focus’.

The Covid-19 pandemic still dominates the news and will inevitably remain at the forefront of our thoughts for some time. Last month we focused on the financial consequences of this virus and we may well return to this subject in future editions. However, in this issue we are going to focus on the very important, and often neglected, subject of Wills and Inheritance Planning. Succession laws in France differ significantly from those in the UK and careful planning is required to mitigate French inheritance tax.

As a reminder, we are Sue Regan, Rob Hesketh, Derek Winsland and Philip Oxley. Together we form Spectrum’s team in the Occitanie.

As touched on in last month’s Newsletter, now is probably a good time to revisit the subject of inheritance planning – an integral part of any financial planning review.

Despite the importance of making sure one’s affairs are in order for the inevitability of our demise, very few people actively seek advice in this area and, as a result, are unaware of the potential difficulties ahead for their families and heirs, not to mention potential tax bills which can be quite substantial for certain classes of beneficiary. With some sensible planning you could save your intended beneficiaries a great deal of stress and dramatically reduce their inheritance tax bill.

The basic rule is, if you are resident in France, you are considered also to be domiciled in France for inheritance purposes and your worldwide estate becomes taxable in France, where the tax rates depend upon the relationship to your beneficiaries.

Fortunately, there is no inheritance tax between spouses and the allowance between a parent and a child is reasonably generous, currently €100,000 per child, per parent. For anything left to other beneficiaries, the allowances are considerably less. In particular, for step-children and other non-related beneficiaries, the allowance is only €1,594 and the tax rate on anything above that is an eye-watering 60%!

There are strict rules on succession and children are considered to be ‘protected heirs’ and so are entitled to inherit a proportion of each of their parent’s estates. For example, if you have one child, the proportion is 50% of the deceased parent’s estate; two children, one-third each; and if you have three or more children, then three-quarters of your estate must be divided equally between them.

You are free to pass on the rest of your estate (the disposable part) to whoever you wish through a French will and, in the absence of making a will, if you have a surviving spouse, he/she would be entitled to 25% of your estate.

You may also be considered domiciled in your ‘home country’ and if so, this could cause some confusion, since your home country may also have the right to charge succession taxes on your death. However, France has a number of Double Taxation Treaties (DTT) with other countries covering inheritance. In such a case, the DTT will set out the rules that apply (basically, ‘which’ country has the right to tax ‘what’ assets).

For example, the 1963 DTT between France and the UK specifies that the deceased’s total estate will be devolved and taxed in accordance with the person’s place of residence at the time of death, with the exception of any property assets that are sited in the other country.

moving-to-france

Therefore, for a UK national who is resident in France, who has retained a property in the UK (and does not own any other property outside of France), the situation would be that:

  • any French property, plus his/her total financial assets, would be taxed in accordance with French law; and
  • the UK property would be taxed in accordance with UK law, although in theory, the French notaire can take this asset into account when considering the fair distribution of all other assets to any ‘protected heirs’ ie. children

If a DTT covering inheritance does not exist between France and the other country, with which the French resident person has an interest, this could result in double taxation, if the ‘home’ country also has the right to tax the person’s estate. Hence, when people become French resident, there are usually two issues:

  • how to protect the survivor; and
  • how to mitigate the potential French inheritance taxes for other beneficiaries

Protecting the survivor
There are various ways in which you can protect your spouse:

European Succession Regulation No. 650/2012
Many of you will no doubt have heard about the EU Succession Regulations that came into effect in 2015 whereby the default situation is that it is the law of your place of habitual residence that applies to your estate. However, you can elect for the inheritance law of your country of nationality to apply to your estate by specifying this in a French will. This is effectively one way of getting around the issue of ‘protected heirs’ for some expats living in France.

Adopting a ‘community pot’ marriage regime or family pact
There are other tried and tested French structures available to fully protect the rights of a spouse, that don’t rely on the notaire having an understanding of the succession laws of other countries.

You could choose to have the marriage regime of ‘communauté universelle avec une clause d’attribution intégrale au conjoint survivant’. Under this marriage regime, all assets are owned within a ‘community pot’ and on the death of the first person, those community assets are transferred to the survivor without any attribution of half of the assets to the deceased’s estate.

However, adopting a ‘community pot’ marriage regime would not be suitable for families with step-children. This sort of arrangement could be subject to a legal challenge by the survivor’s step-children as they could miss out on their inheritance due to the fact that there is no blood relationship with the step-parent.

In this situation, a family pact (pacte de famille) could be the solution, whereby families agree in advance who will inherit and when. Of course, this would only really work where there is an amicable relationship between parents and children, as the children are effectively waiving all or some of their right to inherit.

There are a number of other ways in which you can arrange your affairs to protect the survivor, depending on your individual circumstances, and we would always recommend that you discuss succession planning in detail with a notaire experienced in these matters.

Mitigation of inheritance tax
On whichever planning you decide, it is important to remember that the French inheritance tax rules will still apply. So, even though you have the freedom to decide who inherits your estate, this will not reduce the potential inheritance tax liability on your beneficiaries, which, as mentioned above, could potentially be very high for a step-child. Hence, there will still be a need to shelter financial assets from French inheritance taxes.

By far and away the most popular vehicle in France for sheltering your hard-earned savings from inheritance tax is the Assurance Vie. The assurance vie is considered to be outside of your estate for tax purposes and comes with its own inheritance allowances, in addition to the standard aIllowance for other assets. If you invest in an assurance vie before the age of 70 you can name as many beneficiaires as you like, regardless of whether they are family or not, and each beneficiary can inherit up to €152,500, tax-free. The rate of tax on the next €700,000 is limited to 20% – potentially making a huge saving for remoter relatives or step-children.

Let’s look at a simple example of the inheritance tax position of a married couple with two children, comparing the IHT position with and without investing in assurance vie:

CLICK ON THE IMAGE TO DOWNLOAD PDF

It is clear to see from this example that by wrapping their medium to long term savings in an assurance vie, this couple have saved each child €30,500 in IHT.

Of course, the more beneficiaries nominated, for example grandchildren, siblings, etc, the greater the IHT saving overall. Beneficiaries can be changed or added to the assurance vie at any time. Remember, also, that beneficiary nominations are not restricted to family members, so, whoever you nominate gets the same allowance.

The inheritance allowance on premiums paid to assurance vie after age 70 are less attractive at €30,500 of the premium (capital investment) plus the growth on the capital shared between all named beneficiaries, and the remaining capital invested is taxed in accordance with the standard IHT bands.

Nevertheless, an assurance vie is still a worthwhile investment after the age of 70 as, in addition to the inheritance tax benefits, assurance vie offers personal tax efficiencies to the investor such as gross roll-up of income and gains whilst funds remain in the policy and an annual income tax allowance of €4,600, or €9,200 for a couple, after 8 years.

So, in order to ensure that your inheritance wishes are carried out, some planning may be required and there are investment opportunities to mitigate the IHT for your chosen beneficiaries.

Please contact us if you would like to discuss your particular circumstances.

The Spectrum IFA Group – Occitainie
occitainie@spectrum-ifa.com

Planning for the Inevitable

By David Hattersley - Topics: Inheritance Tax, Spain, Succession Planning, Wealth Tax, Wills
This article is published on: 13th February 2020

13.02.20

The Grim Reaper is not a nice subject, but its finality remains. There are those left behind, alone after the loss of their Spouse or Partner. There is a grieving process. But at the same time is the harsh reality of due process. Wills, Probate, Succession Tax, Inheritance Tax and Death Certificates spring to mind, with added complication in a “Cross Border” society. One hopes that we can offer sympathy, support and help, but trying to soften the blow for loved ones is best prepared for with forward planning such as Wills, Funeral Plans, Life Insurance and Estate Planning.

Circumstances prior to death take many forms. Recent family experience has bought all of this into sharp focus; there was the duality of emotions, allied to the need to help in a professional capacity in what was a complex mire. The double edged sword of living longer applies. Death can be quick, or prolonged due to substantial improvements in many critical fields such as cancer treatment.

“Lingering Death” can take months or years. Drugs can help alleviate Dementia & Alzheimer’s, but do not provide a cure. These illnesses are certified causes on a Death Certificate. What isn’t is the loss of “Independent Existence”. This is a gradual erosion; loss of a lifetime spouse/partner, location, loss of mobility and simply carrying out simple day to day tasks all take their toll. It creates an immense strain on the family, financially and emotionally. ”Long Term Care” often starts in the home, but eventually Long Term Care in a Residential Nursing Home can become the only option.

In Spain costs are substantially less than the UK, but for some the UK becomes the only option due to language and family support. Careful planning in advance can sometimes mitigate the more onerous UK costs and “taxes” or help prolong the benefits of living in Spain. But it is complex and many factors need to be considered well in advance, taking into account “Cross Border Taxes” and differing rules.

It is hard to consider the impact of all the above and many people prefer to ignore it, but I feel compelled to bring this important subject into the open. There are things you can do to make things easier for your loved ones; if financial and legal aspects are well planned out, that is one less thing for them to worry about. I will be posting a series of articles dealing with the many differing issues that I have come across and the steps you can take to overcome them, as it will affect us all one way or another.

Don’t despair or defer; positive steps can be made to mitigate future headaches as much as possible and we are here to help. One of the best ways forward is to sit down with someone who understands the possibilities and to make a plan. Contact me now if you would like to discuss what you can do to make the future easier.

Creating THE Folder – your financial snapshot

By Robin Beven - Topics: power of attorney, Spain, Wills
This article is published on: 27th February 2019

27.02.19

It was ten years ago that my wife, son and I (and our golden retriever) had to evacuate our house along with 15,000 other residents of La Nucia, Alicante, due to fire risk.

With forty mile-an-hour winds, the fire was fast approaching; we grabbed two suitcases of necessities, computer and personal documents case – that was about all we could fit into the car.

Fortunately, we returned 12 hours later and our house was still intact!

This reminded me to update my personal records because had they been lost, or worse still had I demised in the fire, my inheritors, loved ones, would have had undue strain at the most stressful time trying to deal with things. So, within a week I had updated everything in my fire-proof case and also recorded things digitally and let my executors know where all could be found.

Are you confident that all of the papers and documents you hold are not only all in order, but in equal measure, somewhere where they can be found and easily understood in the event of your demise? I know some individuals and couples who don’t know where all of the important documents relevant to their lives are.

We all spend time every year making sure the ITV for the car is sorted, house insurance and car insurance policies are up to date, tax returns are filed etc. How about putting some time aside to create a folder (let’s call it “THE Folder”) or fire-proof case where documents can be found?

So what is THE Folder?
It is a single file (physical or digital) where all important personal and financial information is kept? This allows access to these documents in the event that you are no longer around. If it is only one family member that takes the lead on the finances, it is imperative that other family members or executors know where to locate things.

So what should be in THE Folder?
Financial documents such as:
• Birth, marriage and divorce certificates, as applicable!
• Bank account details, including online login details
• E-mail and social media account details and logins
• Life assurance policies
• Funeral plan policy
• Pension documentation and statements
• Investment documentation and statements
• Wills (Spanish, UK, etc)
• House ownership deeds

THE Folder can be very simple, and I always suggest contact details for each of the relevant assets should be marked up as well. Also, make sure that when THE Folder is complete, you sit down together and explain all of the information it contains.

Is it worth the effort?
At a time of loss it can be stressful enough, without having to try to piece together the deceased’s financial affairs. This can be a really difficult time for family members, even more so if your support network, typically children, is back home in the UK.

However, preparing THE Folder is much more than just avoiding stress; if you leave behind an administrative nightmare, you could delay access to inheritors’ funds and potentially cost a small fortune in legal fees.

Which is best physical or digital?
This comes down to personal preference but I’d suggest both if possible. A digital file listing all your assets can be accessed by inheritors but, of course, there are original documents like wills, birth & marriage certificates to consider, hence, a fire-proof case.

An electronic file can be stored on your main computer, in the cloud or on an external hard drive. Make sure everyone knows how to access the computer, cloud or hard drive though!

A physical folder keeps all of the important information together, but make sure it is large enough to keep everything together. I’ve known one client 20 years, now elderly, and throughout have been unable to persuade her to use anything other than plastic bags! I even bought her two shiny new folders and volunteered to help her organise things. At least, when she declared her Modelo 720 (Overseas Assets Declaration) in 2013 this was half the job done!

How often should THE Folder be reviewed?
Firstly, note when it was created and last reviewed so that anyone using it knows. Then reviewing the THE Folder on an annual basis should be sufficient or, of course, whenever a significant change occurs which you consider materially important. Again, be sure to tell someone about it! There is little point going to the effort of creating such a folder if no one knows of its existence or where to find it.

Incidentally, along with my sister, I’m power of attorney (POA) holder to our mother that includes financial and health & welfare. It actually took months to record everything because of the added burden of having to write to all – as in the financial documents list above – with certified copy POA’s.

Please let me know if you would like a digital version of THE Folder that is printable as well.

As a British citizen living in France who can look after my financial affairs if I become incapacitated?

By Tony Delvalle - Topics: Estate Planning, France, Trusts, United Kingdom, Wills
This article is published on: 14th December 2018

14.12.18

There has been a huge rise in the number of lasting powers of attorney set up as dementia and Alzheimer’s have become the biggest cause of death.

Power of attorney arrangements allow an individual’s financial and health affairs to be looked after by someone else, the attorney, if they lose mental capacity in the future.

Several million “lasting” agreements have been registered since 2008, when they replaced “enduring” power of attorneys, amid concerns that the rules were too easy to abuse. There are two types of agreement – one covering finances and property, and another for health and welfare. Finance and property is far more popular.

The sharp rise in new agreements – which are set up on average when the donor is 75 – comes as the Office for National Statistics reveals deaths from dementia and Alzheimer’s accounted for almost one in eight deaths in 2015 – a total of 61,686 people – overtaking heart disease as Britain’s biggest killer. It is steadily on the increase.

Many people are still exposed as the majority of people have not appointed a power of attorney. It is possible for someone to take control of your financial or welfare decisions after an individual becomes mentally incapable, this can be a lengthy and complicated process with extra cost, which can cause distress at an already difficult time.

Without power of attorney, friends and family have to retrospectively apply to the Court of Protection and prove why they should assume responsibility. This process incurs court fees and can take up to 16 weeks, leaving money locked into accounts until a decision is made. Add to this an international dimension and it is certainly a complicated problem.

As a British citizen in France you can do either a UK lasting power of attorney or a French mandat de protection future. The choice between which one is best will depend where you intend to live now and the future and where is the main part of your estate.

Let’s look at the UK and French legal systems available in cases of incapacity. The two different types of lasting powers of attorney in case of incapacity in England are Health and Welfare, and Property and Financial, whereas in France there is only one the mandat de protection future.

UK Health and Welfare covers

  • Daily routine
  • Moving into a care home
  • Life sustaining treatment

UK Property and Financial covers

  • Managing bank or building society account
  • Collecting benefits or a pension
  • Selling their home

French Mandat de protection future covers all aspects of a persons financial and health well being.

1) As a British citizen living in France, which law would govern the administration of your estate in case of incapacity?
– French law will be applicable under the provisions of the Hague Convention

2) What does French Law use to protect people from incapacity? The Mandat de protection future is one choice and covers all aspects of a persons financial and health well being.
* Trusteeship
* Guardianship

3) Could you prepare for a physical or mental incapacity by appointing somebody you trust to administer your estate, pay your debts, manage your income in France?
Yes of course.

4) Would that power of attorney be applicable and enforceable abroad?
Yes it would be efficient in most countries and in 100% of the countries who ratified the Hague Convention such as England and Wales. In other words you could prepare a LPA or mandat de protection future and both should be applicable.

5) Does the French power of attorney have a limited scope? Can the attorney sign a deed of sale on your behalf?
a) Notarial mandate (notarial deed extend the power of the guardians up to the possibility of selling the estate)
b) Mandate not supervised by the Notaire (mere administration by an appointed trustee + the Judge)

So both are legal and which one is best for you may depend on a number of factors. What your assets are, where they are held and in what way, jointly, individually, what you want from them, inheritance planning etc.

The most important thing is to do something. Taking good legal and financial advice before you do to see what is best for you and avoid potential future problems when you least need them is imperative.

Inheritance Planning in France

By Sue Regan - Topics: France, Inheritance Tax, Le Tour de Finance, Wills
This article is published on: 3rd August 2018

03.08.18

Despite the importance of making sure one’s affairs are in order for the inevitability of our demise, very few people actively seek advice in this area and, as a result, are unaware of the potential difficulties ahead for their families and heirs, not to mention potential tax bills which can be quite substantial for certain classes of beneficiary.

The basic rule is, if you are resident in France, you are considered also to be domiciled in France for inheritance purposes and your worldwide estate becomes taxable in France, where the tax rates depend upon the relationship to your beneficiaries.

Fortunately, there is no inheritance tax between spouses and the allowance between a parent and a child is reasonably generous, currently €100,000 per child, per parent. For anything left to other beneficiaries, the allowances are considerably less. In particular, for step-children and other non-related beneficiaries, the allowance is only €1,594 and the tax rate on anything above that is an eye-watering 60%!

There are strict rules on succession and children are considered to be ‘protected heirs’ and so are entitled to inherit a proportion of each of their parents’ estates. For example, if you have one child, the proportion is half; two children, one-third each; and if you have three or more children, then three-quarters of your estate must be divided equally between them.

You are free to pass on the rest of your estate (the disposable part) to whoever you wish through a French will and, in the absence of making a will, if you have a surviving spouse, he/she would be entitled to 25% of your estate.
You may also be considered domiciled in your ‘home country’ and if so, this could cause some confusion, since your home country may also have the right to charge succession taxes on your death. However, France has a number of Double Taxation Treaties (DTT) with other countries covering inheritance. In such a case, the DTT will set out the rules that apply (basically, ‘which’ country has the right to tax ‘what’ assets).

For example, the 1963 DTT between France and the UK, specifies that the deceased’s total estate will be devolved and taxed in accordance with the person’s place of residence at the time of death, with the exception of any property assets that are sited in the other country.

Therefore, for a UK national who is resident in France, who has retained a property in the UK (and does not own any other property outside of France), the situation would be that:
• any French property, plus his/her total financial assets, would be taxed in accordance with French law; and

• the UK property would be taxed in accordance with UK law, although in theory, the French notaire can take this asset into account when considering the fair distribution of all other assets to any ‘protected heirs’ (i.e. children).

If a DTT covering inheritance does not exist between France and the other country, with which the French resident person has an interest, this could result in double taxation, if the ‘home’ country also has the right to tax the person’s estate.
Hence, when people become French resident, there are usually two issues:
• how to protect the survivor; and
• how to mitigate the potential French inheritance taxes for other beneficiaries.

European Succession Regulation No. 650/2012
Many of you will no doubt have heard about the EU Succession Regulations that came into effect in 2015 whereby the default situation is that it is the law of your place of habitual residence that applies to your estates. However, you can elect for the inheritance law of your country of nationality to apply to your estate by specifying this in a French will. This is effectively one way of getting around the issue of ‘protected heirs’ for some expats living in France.

However, the UK opted out of the Regulations and therefore, it is not yet certain how effective the EU Regulations will be until there have been some test cases. I would always recommend that you discuss this in more detail with a notaire who can advise you on the subject of French wills.

If, after taking the advice of a notaire, it transpires that this is the best course of action for you to achieve your inheritance objectives, it is important to note that the French inheritance tax rules will still apply. Therefore, even though you have the freedom to decide who inherits your estate, this will not reduce the potential inheritance tax liability on your chosen beneficiaries, which, as mentioned above, could potentially be very high for a step-child. Hence, there will still be a need to shelter financial assets from French inheritance taxes.

Inheritance planning for French residency can be very complex, especially where there are children from previous relationships. This is often the starting point of my discussions with a prospective client. Most couples with children that I come across want their spouse or partner to inherit everything upon first death and for the children to inherit on second death. This isn’t possible under standard French Succession law, but it can be achieved by putting in place strategic planning, which is something on which we can provide advice.

If you would welcome a confidential discussion about your own inheritance planning, the mitigation of inheritance taxes for your chosen beneficiaries or a general chat about your overall financial situation, please feel free to contact me by e-mail at sue.regan@spectrum-ifa.com or by telephone on 04 67 24 90 95.

In addition, you can meet me and other members of the Spectrum team at the Tour de Finance, which is once again coming to the stunning Domaine Gayda in Brugairolles 11300. This year’s event will take place on Friday 5th October 2018. Places are by reservation only and it is always well attended so book your place early by giving me a call or dropping me an email. Our speakers will be presenting updates and outlooks on a broad range of subjects, including:

Brexit
Financial Markets
Assurance Vie
Pensions/QROPS
French Tax Issues
Currency Exchange

So, if you are concerned about your investments and pensions in a post-Brexit world why not join us at this very popular event where you can meet the team in person and listen to a number of industry experts in the world of financial advice.

The Spectrum IFA Group advisers do not charge any fees directly to clients for their time or for advice given, as can be seen from our Client Charter at www.spectrum-ifa.com/spectrum-ifa-client-charter/

The above outline is provided for information purposes only and does not constitute advice or a recommendation from The Spectrum IFA Group to take any particular action to mitigate the effects of French taxes.

Preparing ‘THE’ folder

By Gareth Horsfall - Topics: Estate Planning, Inheritance Tax, Italy, Wills
This article is published on: 10th April 2018

10.04.18

Living in a foreign country is never easy, but have you thought how complicated it would be for your family if you die suddenly?

I am writing this E-zine after my weekly food trip to the Mercato Trionfale in Rome.  I believe it to be the largest indoor market in Rome.  It certainly has a massive choice of fruit, veg, meats, fish and much more.  For any foodies out there, it is well worth a visit.  However, my motivations for going this particular morning were not necessarily the food, but to go and have a natter with the people on the ‘bancarelle’.  As is the norm at markets you tend to have your favourite stalls and you get to know the people and whilst buying the groceries you can stop and put the world to rights, talk about the weather etc.   I love it because it is a break from the everyday routine and it provides me with that connection with people outside work.

So, when I got a call from a lawyer recently to tell me that one of my clients had died, (after a tragic and prolonged illness) I felt I had to go and have a dose of that life infusion once again.

This E-zine is never an easy one to write but I like to throw it out there once a year because I think its important.  Ensuring that your papers are in order in the event of your sudden death is incredibly important when living in another country.  It will provide you with peace of mind that your loved ones will not have too much difficulty in administering your estate, and your family  will be thankful that you did it for them.

The big problem is that as ‘stranieri’ we often have documents spread across multiple locations.  The office, a house in another country, with family members and in that old box that no-one dare look in.

The purpose of this Ezine is to outline a proven way of organizing your affairs to reduce stress in the event of your death.

So what is THE folder?

It is a single file (digital or physical) where you keep all of your important personal and financial information together. It allows easy access to these documents in the event that you’re no longer around to help. It is really important to have it in place where one family member takes the lead on the family finances (as I do in our household). That includes paying bills, managing accounts and storing documents.

Is it worth the effort?

Well, I think it is worth the effort. A time of loss can be stressful enough without having to try and piece together the deceased’s financial affairs. This can be a really difficult time for family members.

However, preparing THE folder is much more than avoiding stress; if you leave behind a administrative nightmare you could delay access to inheritors’ access to funds and potentially cost a small fortune in legal fees.

To give you an example of this, the UK Department of Work and Pensions estimate that there is currently more than £400 million sitting in unclaimed pensions pots in the UK.

Which is best…..physical or digital?

This comes down to personal preference. It can be done by either creating an electronic file that survivors can access in the event of death. This file can then be stored on your main computer, in the cloud or on an external hard drive. Alternatively you can use a physical folder to keep all of the important information together.

For what it’s worth, I decided to do both when building mine because my wife prefers paper and so is happier with hard copies of everything. I prefer digital. I have also shared the digital folder with some trusted family members.

Birth, marriage and divorce

  • Personal birth certificate
  • Marriage licence
  • Divorce papers
  • Birth certificate/adoption papers for minor children

Life insurance and retirement

  • Life insurance policy documents (including beneficiary nomination forms)
  • Details of any employer death in service benefits
  • Personal pension documents
  • Employer pension details
  • Annuity documents
  • Details of any entitlement to state pensions

Bank accounts

  • List of bank accounts with account numbers, login details, passwords etc
  • Details of any credit cards
  • Details of safe deposit boxes

Assets

  • Property, land and cemetery deeds
  • Timeshare ownership
  • Proof of loans made
  • Vehicle ownership documents
  • Stock certificates, brokerage accounts, investment platform details, online investment account details
  • Details of holdings of premium bonds, government bonds, investment bonds
  • Partnership and corporate operating/ownership agreements (including offshore companies)

Liabilities

  • Mortgage details
  • Proof of debts owed

Details of gifts

  • Dates and amounts/values (potentially helpful when calculating any inheritance tax liability)

Income sources

  • Make a listing of all your sources of income, especially ones that your family might not know too much about
  • Employer details
  • A copy of your most recent tax return or accounts

Monthly expenses

(so they can be maintained if necessary or cancelled if not. Essentially list the fixed costs which would need to continue after death)

  • Utilities
  • Insurance
  • Rent/mortgage
  • Loans
  • Subscriptions/memberships

Email and social media account details

  • Facebook
  • LinkedIn
  • Twitter,etc……..

Essentials

  • Will/testament + details of the legal firm that helped create it, if applicable
  • Instruction letter
  • Trust documents
  • Burial/cremation wishes

Contact details

  • List of names and contact numbers for: Financial adviser, doctor, lawyer/solicitor, accountant, insurance broker,

How often should ‘THE’ folder be reviewed?

Firstly, it is sensible to note the date that it was last reviewed so that anyone using it has an idea of how up-to-date the details are.

Going forward, reviewing the file on an annual basis should be sufficient.

Online passwords

If you are not comfortable keeping these in your folder, consider using a password management program. A password manager allows you to save all account usernames and passwords in one place. They are then protected using one master key. There a number of them available. I personally use LastPass – www.lastpass.com

This might be a step too far for you given the data breaches that seem to be happening almost daily, notably Facebook. I appreciate that and if you are not comfortable in using such an app then its important to have a physical record some where that can be accessed in the event of your death.

And finally…

Be sure to tell someone about it. There is little point going to the effort of creating such a folder if know one knows of its existence/where to find it…..