You bring your children up to see the world as their oyster.
They take this literally and off they go. Not all return to live in Australia, but instead become resident of overseas countries. From an estate planning perspective, the residence (in this context called the domicile) of your children, other family members or even friends who are to be the beneficiaries of your will, presents additional complexity to your estate planning.
Beneficiaries Overseas
As you will read, it is important that you understand the impact of your intentions when your beneficiaries are overseas, whether in Commonwealth countries or elsewhere. You will quickly realise the importance of seeking advice from the estate practitioners here in Australia and often in the country in which your beneficiary is domiciled. You should familiarise yourself with advice as to how the foreign jurisdiction will treat your gift. Will it be subject to inheritance tax for example?
The structure of your will is important. You should endeavour to understand the most beneficial and economic way to pass your wealth to your foreign domiciled family member. There are options for you to consider. For example, you may ask whether it is possible to set up a non-resident testamentary trust so your gift avoids Australian taxation treatment.
The nature of the asset you are proposing to leave overseas beneficiaries will have or may have different tax treatment in Australia when it is destined to leave these shores. It may be taxed at destination. As a simple example, leaving the family home to your children disparately domiciled around the world could severely diminish the value of the gift. It could lose advantageous Australian tax treatment such as the 50% capital gains discount on the principal place of residence of the deceased. As you will see, it might be practical and economic to direct cash to foreign beneficiaries rather than the heirloom teaspoons.
The appointment of a foreign domiciled executor and trustee can be fraught unless expert advice is sought so that you understand the implications and the impact of the tax regime in Australia at the very least. Can the executor take out a grant of probate or will there be a need to appoint an attorney in Australia?
There are many questions you should be asking.
