Ask AasaanWill: How to Include Your Foreign Assets in Estate Planning

If you are an NRI or have assets outside India, it is not only wise but also necessary that your foreign assets must be included in your estate planning. Many people forget to do this, but your foreign property, bank accounts, investments, or businesses need directions on succession just like your assets in India. The key to a smooth estate settlement is ensuring that both Indian laws and the regulations of the foreign country where the assets are held are considered.

In terms of the Indian Succession Act, 1925, movable property like bank accounts and securities are generally governed by the law of the deceased's domicile, i.e., the country of permanent residence of the deceased, while immovable property like land or buildings are governed by the law of the country where the property is situated. This means that your foreign assets are therefore governed by the laws of the foreign country in question, whereas the Indian assets will be covered by Indian succession laws. While it sounds complicated, having separate, clear instructions for domestic and foreign assets ensures that the distribution of your estate is done smoothly and according to your desired requirements.

A Real-life Scenario

The Khans, for instance, are an NRI family settled in the UK. The head of the family, here, owns a house in London and inherited property in Mumbai. Unfortunately for them, without proper planning, they will have to pass not one, but several probate processes, i.e., both countries having their own law on succession, time-period for transfer of assets, and obviously taxes. 

To avoid this added complication, the Khans prepared two separate wills, one to deal with their Indian assets in accordance with the relevant succession laws, and another one with respect to their foreign assets in accordance with the inheritance laws of the UK. They also appointed executors who were specialists in the field of cross-border estates. 

Because of proper planning of their affairs, their heirs can get access to the assets more speedily and without costly litigation.

Why Have Separate Wills?

One of the pitfalls NRI families fall into is to have a global Will for covering all their assets. This may cause several legal problems, as different countries have different succession related laws and probate rules. Having separate Wills simplifies matters, as each Will is “governed” by the laws of the country where the asset is located. For example, your Indian will is subject to the Indian Succession Act, 1925, and must also adhere to the Foreign Exchange Management Act (FEMA) regulations related to foreign asset transfers by NRIs. Meanwhile, your foreign assets will be subject to the succession laws of the country where they are located—such as the UK or the US. Having separate but coordinated Wills usually results in faster probate, lower taxes, and fewer chances of disputes or conflicts between jurisdictions.

Transparency is Critical

Total transparency via disclosure regarding your foreign property in your estate planning documents is a vital, but often overlooked, aspect of the process. The Foreign Exchange Management Act (FEMA), 1999, makes it mandatory for NRIs to disclose and document their assets held overseas in foreign countries, and they have to comply with the rules and regulations of the Reserve Bank of India regarding foreign exchange and the transfer of inheritance.

Further, the relevant foreign authorities and jurisdictions also require complete and detailed disclosures about the assets, such as their locations, valuation, and proof of ownership, in order to facilitate succession or probate related proceedings according to their legal frameworks. Keeping and maintaining clear, complete, and up-to-date records ensures that your executors can effectively manage your estate, minimizing the likelihood of legal delays, challenges, and/or regulatory related issues.

Regular Updates Matter

Estate plans are not documents that you can just set and forget about. Life-changing events such as buying or selling overseas assets, getting married, having children, and moving to a different country- all impact who should inherit what. Keeping your wills updated ensures your estate plan is accurate and actually in accordance with your true intentions. Experts usually recommend a review of your estate plan every three to five years, or sooner in case there is a happening of life-changing events.

This way, you can avoid unwelcome surprises or conflicts with your loved ones and guarantee that your legacy is flowing in the direction you want it to.

Pro Tip/ Advice for NRIs

Management of foreign assets requires a special understanding of the applicable local laws and tax implications in each country where you have foreign assets, along with compliance with Indian laws, including the Indian Succession Act, 1925, and FEMA (Foreign Exchange Management Act).

So, when you want to manage certain foreign assets, it is advisable to take the professional help of experts in cross-border estate planning or financial consultants who are aware of the relevant international laws and taxation regulations, to ensure that your estate planning is in conformity with all legal requirements of all relevant jurisdictions, as well as to avoid unnecessary delays in probate, jurisdictional disputes and unexpected tax related liabilities.

This is a very proactive strategy, which shields your wealth, and makes sure that your heirs are able to receive their entitled rightful inheritance with ease and without any unnecessary hindrances.

AasaanWill and Estate Planning

AasaanWill enables you to prepare legally valid wills and settlement deeds that are tailored as per your requirements through an easy to use professional platform. While our main focus is on creating legally valid and comprehensive Wills, we also encourage proactive consultation with cross-border estate planning experts, so that you can have your entire global estate secured. Furthermore, ready availability and systematic maintenance of digital copies of all estate related documents, not only facilitates smooth administration but also provides easy and timely access to the heirs and executors whenever needed, thus reducing stress in trying times.

Ready to safeguard your entire legacy, both in India and abroad? Book a consultation or create your Will with AasaanWill today to streamline your estate planning and secure peace of mind for your loved ones across borders.

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