Navigating estates that include foreign property

The world has become increasingly accessible, which has led to individuals moving to another country, holding assets abroad or having family members living around the world. It is therefore common when someone dies for them to hold property in foreign countries.

When property is held in foreign countries, personal representatives (PRs) may have to take additional steps and advice to deal with the property, its transfer and the rules that apply.

Foreign property estates: key challenges

Common examples for this include:

Each country has its own succession law, rules surrounding tax and the transfer of property. Personal Representatives will need to carefully consider where the property is and what advice may be required.

The key challenge when foreign property or assets are held is which law applies or whether forced heirship rules apply. Other issues include taxation across borders and dealing with the actual administration of the estate that may be delayed.

When an estate ends up being the centre of a dispute, this can cause issues for the parties when trying to agree a settlement. It can often be an issue where a claim has been issued in the courts of England and Wales but the foreign property forms part of the estate. Generally, the courts in England and Wales are unable to make an order that takes into consideration the foreign property. They are unable to bind another court in another jurisdiction.

There are mechanisms that allow for the property to be considered and accounted for but as set out above the court cannot approve of this and instead it becomes an agreement between the parties.

Where foreign property is involved, it may be necessary to seek advice from a professional who is an expert for a specific country. In some cases, the professionals from different jurisdictions may be able to work together to deal with the issues and establish the most appropriate way to deal with everything.

Taking the steps to take advice early on can assist the parties in moving matters forward. Having the information on how to deal with the property may be vital to reaching an agreement and bringing a dispute to an end without the need for lengthy and costly litigation.