UK & US Wills

Do changes need to be made to your UK will?  Do you need a Florida Will?

UK owners often ask us if they need to make any changes to their UK will to make it valid in Florida. We do not pretend to be attornies, but as we understand it unless you are legally a Florida resident, the answer is technically no, you don't have to have a Florida will, but there are still complications and significant probate expenses if you own property in Florida.

Owning US vacation property may result in exposure to the US transfer tax system, particularly US estate tax.  Often nonresident aliens are unaware of this problem until they have purchased the property.  This makes planning to avoid the problem much more difficult.  A nonresident alien of the United States is potentially subject to US estate tax if he or she dies owning "US 'situs' property".  This includes US stocks or bonds and US real property, among other things (see below).  Estate tax exposure can be quite dramatic.  Given the limited exempt amount, even a vacation home of relatively modest value may be subject to US estate tax. Owning the vacation property as joint tenants with right of survivorship, as many nonresident alien couples do, often compounds the problem because of the potential for taxation of the value of the property in each spouse's estate. It is also important to note that your UK Will does not have authority in the US and therefore a US Will is a good idea.
Estate taxes for non-residents

U.S. situated property of a U.S. nonresident decedent is subject to U.S. estate tax. Taxable estate is defined to include any property owned by a nonresident alien at the time of death which is situated in the U.S. U.S. situs property includes the following types of property:

1. U.S. real estate.
2. Tangible personal property physically located in the U.S. (furniture, art work, jewelry, etc. in their home, rental home or office).
3. Shares of stock issued by a U.S. corporation.
4. Partnership interest and interest in a limited liability company if considered a partnership pursuant to Check-the-Box regulations which holds U.S. situs property.
5. Beneficial interest in a trust, domestic or foreign, having U.S. situs assets.
6. Debt obligations of a U.S. person, the U.S. government or any U.S. political subdivision.
7. Deposits with U.S. banks, savings associations and insurance companies if the related interest earned is not exempt from U.S. income tax.
8. Funds held by a U.S. brokerage firm (for example proceeds from the sale of a U.S. real estate placed in a brokerage account awaiting the purchase of another property).
9. Currency held in a safe deposit box.

A $60,000 gross value exclusion ($13,000 unified credit) is allowed against such property. Any portion of the $60,000 exclusion not used to reduce gross gifts can be used to reduce estate assets.

The estate tax is imposed on the decedent’s taxable estate (gross estate less deductions).

A United States Estate and Generation Skipping Transfer Tax Return must be filed when the U.S. asset value exceeds $60,000 or if the taxpayer elects to disclose their worldwide estate and take the prorated U.S. resident amount exemption ($1,500,000). This return is due 9 months after the date of death. Estate expenses and any mortgage debt are allowed only when the decedent is taxed on his or her world-wide assets and then only on a prorated basis based on the ratio of U.S. assets divided by world-wide assets.
Getting probate can be an expensive problem unless you have taken certain precautions in advance. This arises from Florida's insistence that a "Commissioner" be appointed to take the oath of persons who witnessed your signature on the will. This can clearly cause complications, delay and expense if the witnesses cannot be traced or have died.

However, Florida allows "self-proved" wills, so that the witnesses never have to return to take the oath for probate. To "self-prove" a will it must contain certain statements and the witnesses take the oath at the time of signing it before a Notary Public. Not all UK solicitors are Notaries, but most towns have at least one who is. They needn't be the solicitors who helps you draw up your will, as you only need to have the Notary take the oath. Most Notaries are willing to have their assistants act as the witnesses for you, as they understand that most documents requiring their services are needed to comply with overseas jurisdictions where the use of Notaries are more common. An example of wording that we believe is appropriate is as follows, but you may wish to take your own legal advice.

(Show where and when the oath was taken.)

We, (will maker name), (witness 1 name), and (witness 2 name) the testator and the witnesses respectively, whose names are signed to the foregoing instrument, having been sworn, declared to the undersigned officer that the testator, in the presence of witnesses, signed the instrument as his/her last will, that he/she signed, and that each of the witnesses, in the presence of the testator and in the presence of each other, signed the will as witnesses.

(Then space for three signatures)

Subscribed and sworn to before me by (will maker name), the testator, and by (witness 1 name), and (witness 2 name) the witnesses on (date)

(Then the seal, signature, name and commission expiry date of the Notary Public)

Nevertheless since getting probate for a foreign will can be so expensive, many owners prefer to have a separate Florida will that is only in respect of their property and possessions in Florida. If you take this route you need to be careful to ensure that it is drafted so that it does not replace your UK will. Your UK will should also refer to the fact that there is a Florida will in existence to assist in obtaining probate in Florida.