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Inheritance - Swiss Will and tax

This may be a bit nuance, and we will be seeking professional advice, but was hoping some people here may have some experience or some key questions that I can ask any advisors..

My father is in his 80's and has become very ill, whilst he is English (as are his 3 children and wife) he has been a Swiss resident for the last 35 years and has no assets in the UK. Due to his residential status his estate would be exempt from any inheritance tax. His key asset is his Chalet in a ski resort, and there are no plans to sell this in his lifetime, especially now considering his ill health. 

Currently, his plan is for my Mother to be the beneficiary of both the personal chattels legacy and absolute residual gifts. My siblings and I will be named and it is up to the Executors to distribute these in an equal manner as they see fit. 

My Mother is worried that if this happens it could end up with an unnecessary tax bill further down the line when she tries to gift my siblings and I money. She would prefer that the chalet was left to the children, but we set up a bank account in our names but which she can access should she need money. Does anyone know if that is at all possible?

Non of us want to dictate what goes into my father's will, it is completely up to him. He is just very tired and doesn't want to think about any of these things....

Thanks

Comments

  • p00hsticks
    p00hsticks Posts: 13,935 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    It's not clear from your post where the wife and children are resident ? 
  • bjones43
    bjones43 Posts: 9 Forumite
    Name Dropper First Post
    Wife & Children all English. Wife living full time in France for last two years (UK before). Two of the children are in UK and one is a Swiss resident.
  • poseidon1
    poseidon1 Posts: 729 Forumite
    500 Posts First Anniversary Name Dropper
    bjones43 said:
    This may be a bit nuance, and we will be seeking professional advice, but was hoping some people here may have some experience or some key questions that I can ask any advisors..

    My father is in his 80's and has become very ill, whilst he is English (as are his 3 children and wife) he has been a Swiss resident for the last 35 years and has no assets in the UK. Due to his residential status his estate would be exempt from any inheritance tax. His key asset is his Chalet in a ski resort, and there are no plans to sell this in his lifetime, especially now considering his ill health. 

    Currently, his plan is for my Mother to be the beneficiary of both the personal chattels legacy and absolute residual gifts. My siblings and I will be named and it is up to the Executors to distribute these in an equal manner as they see fit. 

    My Mother is worried that if this happens it could end up with an unnecessary tax bill further down the line when she tries to gift my siblings and I money. She would prefer that the chalet was left to the children, but we set up a bank account in our names but which she can access should she need money. Does anyone know if that is at all possible?

    Non of us want to dictate what goes into my father's will, it is completely up to him. He is just very tired and doesn't want to think about any of these things....

    Thanks
    Firstly as you pointed out since your father has clearly lost his original UK domicile of origin for UK tax purposes, there is no UK tax dimension on his eventual death.

    You will be obtaining advice on any Swiss death duties that might be an issue, so no need to speculate on that.

    Turning to your mother her full time residential status in France does give rise to potential cross border tax issues when she eventually inherits from your father.

    With only 2 years under her belt  since her departure from UK, she remains firmly in the UK for IHT purposes at least for next 2 years but there would still remain concrete actions she would need to take to fully remove herself from UK iht jurisdiction assuming it is her intention to become a 'non UK dom' like your father and acquire a French tax domicile of choice for estate planning purposes.

    So yes once your father dies, your mother does have potentially complex UK  IHT/ French death duties/ gift taxes to consider once she is the primary recipient of your father's estate.

    If it is her desire to at least simplify her own estate tax position, then depending on her age and state of health she should be working on erasing her own UK IHT footprint and demonstrate a clear intention not to return to the UK . In this regard, does she retain any assets in the UK ( property, cash , investment portfolio etc) ? 

    Losing ones' UK domicile of origin is actually quite complex, and a link below to an article on this expands on this topic.

    https://www.thefrygroup.co.uk/insights/losing-uk-domicile-who-decides/




  • bjones43
    bjones43 Posts: 9 Forumite
    Name Dropper First Post
    Thanks, yes my Mother has no assets in the UK. I have just checked and she has been in France for 3 years now. 
  • poseidon1
    poseidon1 Posts: 729 Forumite
    500 Posts First Anniversary Name Dropper
    bjones43 said:
    Thanks, yes my Mother has no assets in the UK. I have just checked and she has been in France for 3 years now. 
    Have a read of the article, if she wishes to conclusively sever ties to UK, renouncing UK citizenship and a declaration to HMRC that effect, should take the UK out of the picture and her affairs thereby falling exclusively within the purview of the French fiscal regime. 

    Its a big step however, since of necessity she will be looking to eventually claim French Citizenship and whatever formalities that would entail.

    A bit like the USA, the UK makes life  difficult for its citizens to throw off all tax links to its jurisdiction.
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