Recently I had the great fortune of spending three weeks in the UK. Ostensibly this was a combined work / cricket club tour. The later was more sitting than cricket as 6 of our 9 games were washed out completely!!

From the work front I spent most of my time visiting firms in the centre of London interspersed with a few visits to Bristol and Bournemouth. Some of the firms visited ranked in the top 100 law firms by size in the world, which was a little daunting…..there offices ranged from brand new high rise high tech architectural masterpieces to quaint old buildings older than the combined age of Australia and New Zealand!

Whilst talking to private client practitioners I observed that the type of work we do is virtually the same, given our historical development of our legal systems being based upon the UK system. However, the intricate nature of their Inheritance Tax System meant that most of their client work was a lot more complex than ours.

A relatively new development in the UK is that previously unused Tax Free Thresholds can be clawed back and used as one. In one case (and I must admit to the facts becoming vague here) an estate was being administered where the deceased had a succession of past marriages, 4 or 5, and there was an ability to accumulate the previously unused tax fee thresholds. The calculations had to be made using the rates applicable at the times of the previous deaths of the spouses, which in the earliest case was more than 40 years ago. The practitioner involved was quite confident that when they finally put their case to the Inland Revenue that their calculations will be accepted “because even the IRD has trouble working this out”.

Another issue that would appear more common in the UK is the amount of people that have assets in other jurisdictions, in particular property throughout the European Countries. Generally the rules of inheritance – regardless of what may be written in a Will – vary throughout Europe. For instance in France children have a definitive claim on their parent’s estates as part of their heirship. You cannot exclude them from benefiting from the estate regardless of what you put in your Will and where you are domiciled. Any property you have in France will be available to the children.

The EU is working on this issue at the moment and has various proposals (known as Brussels IV) in which they aim to legislate across the whole of Europe to simplify this. Essentially they are attempting to have one law apply to the estate being the law of the habitual residence as at the person’s death. Although at this stage the UK are not going to adopt the regulation, so how it is managed is anyone’s guess!

For anyone with client with UK (or European assets) I have various contacts that can assist at reasonable costs, although some do have to cover their large office outlays!!

PUBLICATION: ENVOY – The newsletter of The New Zealand Institute of Legal Executives
AUTHOR: Andrew Johnstone, APEARS, Sydney, Australia

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