Understanding UK private client law as an American abroad

Julie Man, Partner in the Russell-Cooke Solicitors, private client team.
Julie Man
3 min Read

Spend a day in London and its surrounding counties and you are certain to meet at least one American living abroad. The bustling capital and its picturesque suburbs continue to be the most popular areas for expatriates to settle whether spending a year in the UK for a sabbatical or settling more permanently.

Whether they have moved to the UK to pursue a romantic relationship, to discover more about your ancestry, or for work, most expats are eventually faced with trying to understand local laws and taxation rules. This can be a daunting experience.

Wills and inheritance tax

If you’re an American living in the UK, you may already have a will back home, and think that it will cover your worldwide assets.

If your will is validly made in the US, it should be recognised and enforceable in the UK. However, wills drafted outside the UK often include unfamiliar trust arrangements which are treated differently in the UK. This can lead to unwanted (and often very expensive) tax consequences.

If you die without a will, your domicile will determine which countries’ intestacy rules need to be followed for each asset, but there can be overlap. We can help you understand what your domicile status is, and explain the circumstances that will lead to your domicile changing. We will advise you on how to benefit from the inheritance tax allowances and exemptions available in the UK to ensure that your family receives the maximum benefit.

Unfortunately, sometimes the succession rules of both countries (and even the rules of different states) will clash, which can cause expensive and time-consuming complications without careful forward planning. Often making a will in both countries is the best way forward.

You should also consider that if your only will is in the US, your UK assets could be locked up for months or even years while the US estate is dealt with. Having a separate UK will has practical advantages, enabling the administration processes in both countries to start in both countries in parallel. This is extremely beneficial if there are different tax deadlines in the different countries.

If you have children, you should appoint a UK-based guardian to care for them should the worst happen and until a closer member of the family can fly over to deal with the longer term arrangement. We can also assist you in preparing detailed guidance as to your wishes in the long-term for your children – such as where you would like them to go to school. If your guardians are overseas, it can take time for a relocation to be agreed, and your children may need to be placed with social services during the intervening months or years.

Lasting Powers of Attorney (LPAs)

You may have made a Power of Attorney document in the US, but unfortunately, this will not be recognised in the UK.

In the UK, an LPA is used to appoint a trusted person or persons to make decisions for you when you aren’t able to. An LPA must be registered with the court before it can be used. There are two types of LPA:

  • A property and financial affairs LPA, which gives your attorneys authority to deal with your property and finances, within parameters chosen by you; and
  • A health and welfare LPA, which allows your attorneys to make choices as to your care and medical treatment on your behalf, but only if you lack mental capacity to do so yourself. You can also decide whether you want them to be able to give or refuse consent to life-sustaining treatment.

If you lose capacity to make decisions without an LPA in place, your family will instead need to make a costly, time consuming and stressful court application to gain the right to manage your affairs.

How we can help

Wills and LPAs are some of the most important documents you can put in place to protect your assets and your family. This is especially important if you have assets in more than one country.

If you would like to put in place a UK will or LPA or want to review your cross-border estate in general, contact our private client team.

Briefings Individuals & families tax taxation rules inheritance tax IHT tax law private client law private client lawyers expat expatriate American in London