Practical Estate Planning Advice UK Expats Should Consider

For UK expats, navigating the complexities of cross-border laws and tax regimes is essential to protecting the estate and beneficiaries effectively.

In this guide, we’ll offer practical estate planning advice tailored for UK expats. We’ll focus on optimising asset allocation, reducing tax liabilities, and mitigating administrative challenges to ensure your estate is managed according to your intentions.

What Is Estate Planning?

Estate planning involves anticipating and arranging the management of your estate in case of your incapacitation or death.

Through strategic estate planning, you can protect your wealth, arrange asset distribution, and ensure your loved ones don’t have to navigate time-consuming and expensive processes to inherit your estate.

This process is essential for anyone possessing assets—regardless of their size or nature—including cash, property, or personal possessions.

In the absence of a valid estate plan, the state will assume control over the management and distribution of your assets as follows:

What Are the Components of Estate Planning?

Estate planning does not follow a standardised structure. Given the distinct nature of each individual’s circumstances and objectives, estate plans are inherently customised and may encompass a range of components, including:

• Writing instructions for distributing assets
• Drafting essential documentation for managing your estate
• Adopting strategies aimed at minimising the tax burden
• Arranging a seamless transfer of company ownership
• Designating beneficiaries for pensions and life insurance policies

Best Estate Planning Tips for Expats

Developing a comprehensive estate plan is often a complex and time-consuming endeavour. The following tips for estate planning can help you navigate the process with more clarity:

Establish a Power of Attorney

A power of attorney is a legal document that appoints one or more people to act on your behalf if you become incapacitated or unable to effectively manage your finances or welfare.

The document may be limited to financial matters and should provide clear instructions regarding how the appointed individuals will manage your estate if you become incapable of doing so yourself.

Additionally, a power of attorney can designate a person to make healthcare decisions on your behalf and outline your preferences concerning medical treatment under various circumstances.

Having this document minimises the risk of legal complications. In the absence of an established power of attorney, should you become incapacitated, any individual seeking to act on your behalf may be required to petition the Court of Protection to be appointed.

A common misconception is that spouses are automatically granted the power of attorney through marriage.

To grant your spouse (or another individual) legal authority to act on your behalf, seek assistance from a solicitor. They can explain the process and assist you in preparing the necessary documentation.

Create a List of Your Assets and Debts

Establishing a detailed inventory of your assets and debts is a key estate planning preparation step that will enable you to:

• Gain a clear and comprehensive understanding of your financial position
• Facilitate the efficient allocation of assets, reducing the potential for disputes among beneficiaries
• Strategically plan for the repayment of outstanding debts

The steps below can assist you in creating a detailed and accurate list:

1. Catalogue valuables from your residence: Catalogue all valuable items in your home, including electronics, furniture, artwork, family heirlooms, vehicles, and jewellery. For estate planning purposes, annotate any items you intend to bequeath to specific individuals or donate to a charitable organisation.
2. Account for your overseas assets: Compile a list detailing any property or financial assets held outside your country of residence. Organising these assets by country is recommended if you’ve resided across multiple jurisdictions, as cross-border estate planning is subject to differing legal and tax frameworks.
3. Record your non-physical assets: Document all intangible holdings, such as bank accounts, investment portfolios, pensions, life insurance policies, and digital assets. Where possible, include pertinent details such as account numbers, managing institutions, and the names of financial advisers or custodians.
4. Itemise your debts: Prepare a detailed summary of your outstanding financial obligations, including mortgages, credit cards, vehicle financing, and other loans. For each liability, record account numbers, the locations of relevant agreements, and the contact information of associated institutions or advisers.

Sign these lists and create several copies. Give the originals to your estate administrator, and keep one copy for yourself and one for your spouse, child, or other beneficiary.

Draft Your Will

A will is a legal document that outlines your intentions regarding the distribution of your estate and the care of any dependants. In the absence of a valid will, the implications can be significant and may include the following:

1. Your assets won’t be distributed according to your preferences.
2. Your loved ones may encounter considerable emotional and administrative burdens during probate.
3. Your beneficiaries will incur substantial legal and court-related expenses through estate administration.

For UK expats, drafting a will can be particularly complex, as they often possess assets in multiple jurisdictions and need to navigate complex cross-border laws. To ensure compliance and accuracy, expats should seek professional will-writing assistance.

Experts at Titan Wealth International provide expert guidance to ensure full compliance with local and UK legal systems while drafting a will that is appropriately structured for each applicable jurisdiction.

Choose an Estate Administrator

An estate administrator, or an executor, is the individual appointed to manage and execute the provisions of your will upon your death. It is essential to select someone trustworthy and capable of executing these responsibilities.

It’s possible to name your spouse or another family member as your estate administrator. However, this decision warrants careful consideration. In the aftermath of your passing, those closest to you may face emotional distress, potentially hindering their ability to manage complex administrative responsibilities effectively.

It may be better to name an impartial third party as your estate administrator. Qualified advisers, such as those at Titan Wealth International, can approach estate administration without emotional bias and act according to your wishes.

An attorney-in-fact (appointed through a power of attorney) can act on your behalf during your lifetime. They lose their authority once you pass away, at which point the appointed estate administrator assumes responsibility for managing your affairs.

Settle Trusts

A trust is a legal arrangement in which assets are transferred to a trustee – either an individual or institution – who manages them on behalf of designated beneficiaries. UK expats can settle assets into various types of trusts, including:

• Bare trusts.
• Discretionary trusts
• Loan trusts
• Charitable trusts.
• Generation-skipping trusts.

These trust structures may support estate planning by:

• Enabling efficient asset transfer by bypassing probate.
• Enhancing confidentiality.
• Providing tailored control over how and when beneficiaries receive assets.
• Potentially reducing or mitigating inheritance tax (IHT) liability.

From 6 April 2025, the UK replaced its domicile-based IHT regime with a residence-based system. Expats who have not been UK tax residents for at least 10 of the previous 20 tax years are no longer liable for IHT on their worldwide estate, regardless of their domicile status.

Consequently, restructuring your UK situs and global assets into a properly established trust – aligned with your current or intended residency status – can be an effective strategy for reducing or eliminating future IHT exposure.

Understand Trust Exit and Periodic Charges

From April 2025, for trusts settled by UK long-term residents (LTRs), inheritance tax (IHT) charges may apply not only at the time of settlement but also during the life of the trust. These charges include:

• Periodic charges: Every 10 years, the trust may be subject to an IHT charge of up to 6% on the value of relevant property exceeding the available nil-rate band (NRB).
• Exit charges: When assets leave the trust (for example, when distributed to beneficiaries), an IHT exit charge may apply, based on the time elapsed since the last 10-year anniversary and the rate applied at that charge.

These rules apply to both UK and overseas assets deemed relevant property. Expats establishing trusts as part of their estate planning strategy should carefully time the settlement and asset withdrawals to minimise exposure to these charges.

Review Your Pension Accounts

Under current UK legislation, pension benefits do not form part of your estate upon death.

Consequently, they fall outside the jurisdiction of your executor or estate administrator and are typically distributed at the discretion of the pension scheme’s trustees, unless a valid beneficiary nomination is in place.

However, as of April 2027, UK pensions (and some overseas schemes) will be considered part of your estate for IHT purposes.

From that date, the UK government will begin treating most defined contribution pensions – including SIPPs (Self-Invested Personal Pensions), workplace pensions, and certain QNUPS (Qualifying Non-UK Pension Schemes) – as part of your estate for inheritance tax purposes.

Defined benefit pensions and some overseas pension schemes may also be affected unless classed as excluded property.

This means that, even if your pension is held offshore, any remaining pension funds on death could face a 40% IHT charge when passed to non-spouse beneficiaries.

While withdrawals may remain income tax-free in certain jurisdictions, the value of unspent pension assets will be included in your taxable estate.

To mitigate the impact of this change:

• Consider withdrawing up to 25% of your pension tax-free before the new rules take effect in 2027.
• Explore the use of trust structures to shelter pension benefits from future IHT exposure.
• Review and update your nominated beneficiaries and death benefit instructions.

For expats, tax residency remains critical. If you are not classed as a UK long-term resident (LTR) or plan to relinquish LTR status, you may continue to access pension benefits tax-free – particularly if you reside in a country that either levies no income tax or holds a double taxation agreement (DTA) with the UK, such as the UAE.

Speak with a qualified adviser to assess your pension strategy in light of these developments. They may also recommend life insurance held in trust as a potential solution to offset IHT liabilities on pension assets that remain within your estate.

Understand the Impact of UK Inheritance Tax on Your Estate

As of April 2025, any UK situs assets above the nil-rate band are liable for UK inheritance tax (IHT) set at 40% regardless of your residency status.

Simultaneously, your worldwide estate will be subject to IHT if you are considered a long-term UK resident or pass away while living in the UK, irrespective of your residency status.

To mitigate your inheritance tax exposure, consider the following strategies:

• Fully utilise the nil-rate band set at £325,000 and other allowances, such as the £175,000 primary residency allowance, to minimise IHT liability.
• Make structured gifts to your loved ones using potentially exempt transfers during your non-LTR window.
• Donate a portion of your estate (10% or more) to charity to reduce the applicable IHT rate from 40% to 36%.
• Review and restructure your UK situs assets, such as UK situs stocks or bonds, to limit IHT exposure.
• Time any transfers and estate restructuring strategies according to your long-term residency status. For instance, establish trusts during your non-LTR window to eliminate the 20% chargeable lifetime transfer tax.
• Non‑LTR spouses of LTRs can elect to be treated as LTRs for IHT purposes from 6 April 2025—preserving the full spousal exemption.

Spouse/Civil‑Partner Election for IHT Relief

From 6 April 2025, non‑LTR spouses or civil partners of long-term UK residents can elect to be treated as LTRs for inheritance tax purposes.

This election preserves the full IHT exemption for spouse-to-spouse transfers, even when the receiving spouse would not otherwise qualify under standard residency rules.

• This can be especially advantageous in cross-border marriages where only one partner meets the LTR threshold.
• The election must be formally made to HMRC – consult a financial adviser to assess eligibility and submission timelines.

While the outlined strategies can guide you, hiring a professional is advised to minimise the impact of IHT on your estate and ensure compliance with UK and local tax laws and regulations.

Experts at Titan Wealth International are well-versed in UK and international inheritance tax laws and can recommend strategies to help preserve your wealth in the most tax-efficient manner.

Review Your Documents

Review and, if necessary, update relevant estate planning documentation at least once every three to five years or after significant life events such as marriage or divorce, relocation, or birth of children or grandchildren.

You are also advised to update the documentation if you’ve purchased new property, consolidated pension pots, or experienced any other personal or financial change that could affect your estate planning.

Consult Professionals

Navigating estate planning without a professional’s assistance is possible, but it may lead to unfavourable consequences:

A qualified financial adviser with expertise in cross-border estate planning can help mitigate these risks and develop a bespoke strategy that aligns with applicable legal and tax frameworks across jurisdictions.

From drafting a valid will and establishing appropriate trust structures to managing documentation and compliance requirements, professional guidance ensures your estate is protected, tax-efficient, and distributed in accordance with your intentions.