A 5,500-word reference covering forced heirship in civil law countries, the UK domicile trap, US estate tax for non-citizens, EU succession regulation, and the practical structures (trusts, foundations, life insurance) that work across jurisdictions.
Cross-border estate planning is the most complex area of international personal finance. Unlike income tax, where double-taxation agreements provide relatively clear rules for allocating taxing rights, inheritance tax has no comprehensive global treaty network. Each country applies its own rules to determine which assets are taxed at death and at what rate, with limited coordination between countries. The result is that cross-border estates can face double taxation, distribution under unwanted laws, and family disputes that drain the estate. This 5,500-word guide covers the inheritance law and tax frameworks of the major jurisdictions, the limited treaty relief available, and the practical structures that can mitigate the problems.
Cross-border estates are governed by four interacting legal systems: the law of the deceased's nationality, the law of their last residence, the law of where each asset is located (situs), and the law chosen in the deceased's will. These systems can conflict, and the resolution of conflicts depends on private international law rules that vary by country.
Some countries (particularly civil law countries in Europe) apply the law of the deceased's nationality to the succession of their worldwide estate. A French citizen dying in Spain would have their estate governed by French succession law, even for assets located in Spain. This can override the deceased's choice of law in their will.
Other countries (particularly common law countries) apply the law of the deceased's last residence to the succession of their personal property (movables). Real property (immovables) is typically governed by the law of where the property is located (lex rei sitae). A UK citizen dying in France would have their personal property governed by French succession law, but their UK real property governed by English law.
Real property is universally governed by the law of where it is located. A UK citizen's French holiday home is governed by French succession law, regardless of the deceased's nationality, residence, or will. This can override provisions of a will that purport to dispose of the property differently.
Many countries allow the deceased to choose the governing law of succession in their will. The choice is typically limited to the law of their nationality or the law of their last residence. Without an explicit choice, the default rules apply. The EU Succession Regulation (Brussels IV) allows EU residents to choose the law of their nationality in their will — this is a significant planning tool for expats in EU countries.
Forced heirship is the most significant restriction on cross-border estate planning. In forced heirship jurisdictions, the law reserves a portion of the estate for close family members (typically children, sometimes spouse), regardless of what the will says. The deceased cannot dispose of the reserved portion freely.
Forced heirship applies in most civil law countries, including:
Forced heirship can override the deceased's wishes. A UK citizen with a French holiday home who wishes to leave the home to a friend cannot do so — French forced heirship reserves the home for the deceased's children (if any). The will is ineffective for the French property to the extent that it conflicts with the forced heirship rules.
Forced heirship also creates complications for blended families, unmarried partners, and stepchildren. In most forced heirship jurisdictions, unmarried partners and stepchildren have no reserved portion — they inherit only if the will makes specific provision, and even then only to the extent not reserved for forced heirs.
Several structures can mitigate forced heirship:
UK inheritance tax (IHT) is one of the most punitive inheritance tax regimes in the world, and the "domicile" concept creates a significant trap for expats.
UK IHT applies to transfers of value on death and during lifetime. The standard rate is 40% on the value of the estate above the nil-rate band (GBP 325,000, frozen since April 2009 and expected to remain frozen until April 2030). The residence nil-rate band (up to GBP 175,000) applies where a main residence is passed to direct descendants. The combined allowance is up to GBP 500,000 per individual, or GBP 1 million for a married couple (with transferable allowances).
UK IHT applies to worldwide assets for individuals domiciled in the UK, and to UK-sited assets only for individuals not domiciled in the UK. "Domicile" is a common law concept distinct from residency — it is the country that an individual treats as their permanent home. Everyone has a domicile of origin (typically the father's domicile at birth), which can be replaced by a domicile of choice (by settling permanently in another country with no intention of returning).
Since April 2017, individuals who have been UK resident for at least 15 of the previous 20 tax years are "deemed domicile" in the UK for IHT purposes. This means long-term UK residents are subject to UK IHT on their worldwide assets, regardless of their actual domicile. Deemed domicile also applies to individuals who were UK-domiciled within the previous 3 years (the "5-year rule" for non-doms returning to the UK).
The domicile concept creates a significant trap for UK-domiciled expats. A UK-domiciled individual who has lived abroad for decades remains UK-domiciled for IHT purposes unless they have actively acquired a domicile of choice in another country. Acquiring a domicile of choice requires:
The burden of proof is on the individual asserting a change of domicile, and HMRC is aggressive in challenging claimed changes. Many UK-domiciled expats who believed they had acquired a non-UK domicile have been found to remain UK-domiciled on death, resulting in 40% IHT on their worldwide assets.
Several strategies can mitigate UK IHT for UK-domiciled expats:
US estate tax applies to US-sited assets of non-US-citizen, non-US-resident decedents above USD 60,000. This catches many expats who hold US-listed securities (stocks, ETFs) through international brokers.
For US estate tax purposes, US-sited assets include:
Non-US-sited assets include:
The USD 60,000 exemption for non-US-citizen, non-US-resident decedents has not been adjusted since 1988. Inflation has dramatically reduced its real value. An expat with USD 200,000 of US-listed stocks faces US estate tax of approximately USD 28,000 (40% of USD 140,000, the excess over USD 60,000) — a significant tax on an asset that has no US nexus other than being listed on a US exchange.
Several strategies can mitigate US estate tax for non-US persons:
The EU Succession Regulation (Regulation No. 650/2012, commonly known as Brussels IV) is a significant planning tool for cross-border estates within the EU. The regulation applies to successions opened on or after 17 August 2015.
Under Brussels IV, the default rule is that the law of the deceased's last habitual residence governs the succession of their entire estate. This replaces the previous conflict-of-laws rules that could split the estate between different legal systems.
The deceased can choose the law of their nationality to govern their succession. This choice must be express in a will or equivalent document. If the deceased has multiple nationalities, they can choose any of them. The choice of law overrides the default rule.
For expats resident in EU countries with forced heirship, the choice of law can override the forced heirship rules. A UK citizen resident in France can choose UK law in their will, which means UK succession law (with full testamentary freedom) applies to their worldwide estate (except French real property, which remains governed by French law). This is a significant planning opportunity for expats in forced heirship jurisdictions.
After Brexit, the UK is no longer an EU member state and is no longer bound by Brussels IV. However, the regulation continues to apply to successions where the deceased was resident in an EU member state at the time of death. UK citizens resident in the EU can still choose UK law in their will under Brussels IV — the UK's exit from the EU does not affect this.
An international will is a single will drafted to work across multiple jurisdictions. The will should:
The cost of a properly drafted international will is typically USD 2,000–6,000, depending on complexity.
For complex estates with significant assets in multiple jurisdictions, multiple wills (one per jurisdiction) may be appropriate. This requires careful coordination to avoid the wills conflicting — particularly the "revocation" clause, which can inadvertently revoke the other wills. Multiple wills are typically used when:
Trusts can be effective for cross-border estate planning, but they are not universally recognised. Common law countries (UK, US, Canada, Australia, Singapore, Hong Kong) recognise trusts. Civil law countries (France, Germany, Italy, Spain, Switzerland) do not fully recognise trusts, which can create complications for assets located in those countries.
Trusts can provide:
Trusts are typically used for higher-net-worth estates (USD 1 million+) due to the cost of establishment (USD 5,000–25,000) and ongoing administration (USD 2,000–10,000 per year).
Life insurance with named beneficiaries is one of the simplest and most effective cross-border estate planning tools. The proceeds typically pass outside the estate, directly to the named beneficiary, regardless of forced heirship rules. This can provide liquidity for estate tax payments and ensure that non-forced heirs (unmarried partners, friends, charities) receive a meaningful inheritance.
The key considerations for cross-border life insurance:
Foundations (particularly Liechtenstein, Panama, and similar foundations) can be effective for cross-border estate planning in civil law jurisdictions that do not recognise trusts. A foundation is a hybrid between a trust and a company — it has legal personality (like a company) but is established for a specific purpose (like a trust). Foundations can hold assets across multiple jurisdictions and can provide continuity of management.
Probate is the legal process of administering a deceased's estate. Cross-border probate is significantly more complex than domestic probate because it involves multiple legal systems, multiple tax authorities, and often multiple languages.
For estates with assets in multiple jurisdictions, probate may be required in each jurisdiction. This can mean:
Several structures can mitigate the dual probate problem:
Cross-border estate planning is too complex and too important to DIY. The combination of forced heirship, multiple tax systems, limited treaty relief, and conflicting legal systems creates traps that can cost families significant money and create disputes that drain the estate. The cost of a properly structured cross-border estate plan (typically USD 5,000–25,000 for a mid-net-worth estate, more for complex situations) is small relative to the potential tax savings and the avoidance of family disputes.
The five action items for any expat with cross-border assets:
The right plan, executed during your lifetime, can save your family significant money, time, and stress. The wrong plan — or no plan — leaves your family to navigate multiple legal systems in a foreign language while grieving. The choice is yours, and the time to make it is now, not when it is too late.
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