Money Maven: Moving abroad, but what about my will?

Our personal finance expert is here to answer all your questions from premium bonds to pensions


Old woman with gray white hair and glasses sitting in her armchair in her home and talking on the phone. Grandmother is happy to talk to her children and grandchildren.

August 26, 2022 15:27

Q I am leaving England but my children are staying in the UK.

I have a house which I have transferred the deeds into their names, do I need to make a will as well or just leave them to sort out the inheritance when I am gone?

A How lovely to be going to live abroad.

However it is never a good idea to deliberately die without a will. If you do then you cannot guarantee that your loved ones will receive your estate, as your possessions become known after your death, in the way you want them to.

You say you have given your house to your children.

While this means you no longer own it, it doesn’t remove it from the inheritance tax (IHT) net. It has now become what HMRC regards as a potentially exempt transfer, which means IHT is payable at 40 per cent on the value if you die within three years of gifting it, and then on a sliding scale down to zero if you survive for seven years or more.

Your children will also be liable for capital gains tax (CGT) if they make a profit on on the house from the date it was gifted to when it is sold.

If you don’t make a will, under the current intestacy laws in England, the first £270,000 of your estate will automatically pass to your spouse or civil partner and the remainder split in half with half equally split between any children or their children if they died before you, and the other 50 per cent to your spouse or civil partner.

If you are not married or in a civil partnership, then your other half has no automatic legal entitlement to any of your estate, regardless of how long you have been together.

If your partner or spouse passed before you, and you die without a will, then your children would inherit your belongings equally (or their children if they have also passed).

You don’t say where you are moving to, but this could also complicate matters. Under UK law the taxman will treat you as still being domiciled, your permanent place of residence, in England, if you lived in the UK for 15 of the last 20 years or had a permanent UK address in the three years before your death.

In this case your estate will have to pay UK inheritance tax on all your worldwide assets.

If you outlive these restrictions then you will only need to pay IHT on any UK based assets, not on those owned outside the UK. Inheritance tax is payable on assets over £325,000 if a house is not involved.

It is also worth seeking legal advice as to whether you need to make a will in the country you are moving to if you intend to own property or investments there. Otherwise you potentially leave the executors of your will with problems of different inheritance rules in different countries and which country they need to gain probate to release your assets when you die.

August 26, 2022 15:27

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