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Navigating International Succession: A Case Study in Wealth Management for Expats

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Client Overview:

  • Clients: A married British expat couple residing in Spain for the past 5 years.
  • Objective: Efficiently transfer wealth to their designated nephew while minimizing cross-border tax liabilities.
  • Financial Situation: Net worth slightly above €2 million, with diversified investments.

Client Challenge:

The married couple faced substantial tax implications due to the differences in inheritance laws between Spain (Civil law) and the UK (Common law).

Their designated beneficiary, a nephew, was at risk of inheriting significant tax liabilities in both countries.

Our Approach & Solutions

  • Comprehensive Financial Planning: Conducted a thorough assessment of the clients’ financial situation, considering assets, investments, and future liabilities.

  • Tax Mitigation Strategy: We advised on investing the proceeds from a recent house sale to mitigate future Spanish IHT liabilities. We also identified a vehicle that would equally exempt the invested amount from UK IHT.

  • Cross-Border Wealth Management: Leveraged expertise in international taxation and inheritance laws to devise a strategy that optimally transferred wealth to the designated beneficiary on second death.

  • Legal Consultation: Collaborated with legal experts to ensure compliance with local regulations and maximise tax efficiency.

The Outcome

We successfully implemented a tax-efficient wealth transfer strategy, ensuring the designated beneficiary receives the intended inheritance without any Spanish or UK tax liabilities.

We therefore also mitigated potential challenges associated with cross-border succession, safeguarding the client’s legacy and financial interests.

Highlights

Initial Combined Tax Liability:

€1,026,000

Final Tax Liability After Strategy:

 €88,092

Tax Savings Achieved:

€937,908

Key Takeaways

  • The Importance of proactive wealth management and estate planning for expats residing in multiple jurisdictions.
  • Collaboration between financial advisors, legal experts, and tax professionals is crucial to navigating complex international succession scenarios.
  • The key to achieving the goal was identifying that the beneficiaries are NOT Spanish residents and to ensure that the assets they are inheriting are also outside of Spain.
  • The vehicle was a QNUPS which is also expressly exempt from UK Inheritance Tax. In addition, the QNUPS is outside of the estate and therefore outside of probate, meaning the proceeds can be delivered quickly to the beneficiaries. The vehicle can also provide a loan, which it did, secured against the Spanish property (the only taxable asset remaining in Spain) which eventually reduced the tax from €1,026,000 to a much more palatable €88,092
  • Tailored strategies can help optimise wealth transfer while minimising tax exposure across borders.

How Can We Assist You?

Learn how our expertise in international wealth management can help you navigate complex succession planning challenges with confidence.

Contact us today to begin securing your legacy and optimising your wealth transfer strategy.