We have a deceased, domiciled in Hong Kong, who executed a will in Hong Kong and a further will in the UK.
He owned property in both countries, so I understand it is accepted that immovable property would pass under his UK will.
In respect of the cash asset’s he held in the UK, whilst this will be considered for IHT purposes would it remain an asset accessible to the executors in the UK or does it pass under his Hong Kong estate?
In addition if it is not the case that it is accessible by the executors of the UK estate, is it then also the case that it cant be accessed to settle IHT due in the UK?
Are the wills limited geographically? (i.e. does the UK will only cover UK assets). If not, I would have thought that the final will to be executed (and its executors) might well cover the worldwide estate.
If it is clear that the UK will only covers UK assets and the HK will covers HK (or world ex UK) assets then the UK executors have no resort to the HK assets. The HK executors may have power or even a duty to pay UK IHT depending on the terms of the will and HK law - bearing in mind it is still a liability of the entire estate.
If any UK inheritance tax is due, HMRC will look to the UK executors (if any) to pay this. If the UK executors have distributed the UK assets without paying the IHT, then HMRC can look to those executors personally to pay the liability, including interest and penalties.
On the basis that the deceased was neither domiciled nor deemed domiciled (s.267 IHTA 1984) within the UK, IHT should only be payable on the value of the UK estate. If the will relating to the UK estate has not been revoked by the HK will, the executors within the UK need to consider their cash-flow position, especially if the UK real estate is not to be sold, when deciding if they might pay away any of the cash balances within the UK.
Under which will did the bank account pass? Was it the HK will or under the English will?
Then in any event, and just to check although unlikely, was the UK account a “qualifying foreign currency account”? If so try s. 157, non-resident’s accounts:
(1)In determining for the purposes of this Act the value of the estate immediately before his death of a person to whom this section applies there shall be left out of account the balance on—
(a)any qualifying foreign currency account of his, and
…
(2)This section applies to a person who is not domiciled and not resident in the United Kingdom immediately before his death.
You mention two Wills. As already mentioned, does one will revoke the other, or are they limited to the assets in each jurisdiction, being Hong Kong and the UK? If as implied, that the UK Will revokes the Hong Kong Will, the Hong Kong property will pass according to the UK Will, but if Hong Kong Will (you imply it was made prior to the UK Will) relates to the Hong Kong assets, then they will pass according to the laws of Hong Kong. Assuming your reference to “property” covers Hong Kong real estate, then you will have to reseal the UK Grant in Hong Kong anyway.
I note you refer to the deceased being domiciled in Hong Kong so it seems a little strange that the deceased would make a UK Will that apparently overrides the Hong Kong Will and which covers the Hong Kong property as well as the UK Property. This clearly needs further investigation before going any further, as it may be that you have to obtain a Grant of Probate in Hong Kong first (being where the deceased was domiciled) and then perhaps use that Grant to be resealed in the UK (such reseal appointing to UK Executors to administer the UK Will). If there are two separate Wills, then a both a Grant in Hong Kong and a Grant in the UK for the respective assets in those jurisdictions will have to be obtained.
If the UK Will overrides the Hong Kong Will, then the UK Grant will have to be resealed in Hong Kong in order that the Hong Kong assets can be administered in Hong Kong and distributed as per the UK Will. This might not want the family expected, so if there are significant assets, there might well be a fight to be settled…
Are the Executors under each Will the same - if so, the different procedures in each jurisdiction could be much easier when it comes to the administration of the various assets?
If the deceased was domiciled in Hong Kong, the references to a UK grant are potentially misleading as a separate grant/letter of confirmation will be required for each jurisdiction within the UK in which the deceased held assets.
Similarly, reference to a UK will might also be misleading, especially if there is hereditable property in Scotland.
If both Wills are valid and haven’t been revoked you need to look at what the UK Will actually states regarding which assets it relates to and the payment of tax, your answer is simply there. If it’s the case looking at the Will that each countries succession laws are to be relied on (i.e the UK movable assets are under the Hong Kong Will), it will work as follows:
Hong Kong takes the same view as us on movable and immovable property i.e movable property is governed by the law the deceased was domiciled at the date of death, therefore there is no conflict in Private International Law with our two countries. It is therefore an asset controlled by the Hong Kong Will. There is no death tax in Hong Kong.
Foreign Personal representatives cannot be made liable in England and Wales for acts done under the foreign grant. They will only be liable if they intermeddle as an executor de son tort or apply for a UK resealed grant. In your case like Peter Double says, the Hong Kong Grant will need to be resealed (If moveable assets fall under Hong Kong law) in order to get the movable assets from the UK as it is the Hong Kong Will that deals with theses assets, not the UK Will. At this time all UK assets will need to be added to the IHT400 (IHT400 as its over £150,000) and the tax will be split between property that tax should be paid immediately on and tax that can be paid by instalments. The tax bill can therefore be split at that time. It means that you will need to work with the Hong Kong executors. Unless the Will says anything different.
As the tax that the Hong Kong executors must pay is paid before the grant, then this should prevent any problems on your end. You do not need to worry about the movable assets as it is not your problem, however it is important that you liaise with the Hong Kong executors as you do not want the IHT400 completed without the immovable asset placed on it. The obvious issue here is that you are reliant on the Hong Kong Executors being able to administer the estate quickly. From experience it takes a very long time to get a grant in Hong Kong.
If Hong Kong succession rules apply, perhaps you can get an agreement with the Hong Kong executors for permission for you to pay the movable assets directly from the bank accounts. You will then have a valid tax receipt for them when they apply?
With the above said, in most cases the UK Will will apply to all the UK assets and the executors will be given permission to pay the tax and you can simply deal with the estate as normal.