UK IHT Professional Requirements for Solicitors: Key Considerations When Drafting Cross-Border Wills

The Inheritance Tax (IHT) regime in England and Wales imposes a 40% charge on estates exceeding the £325,000 nil-rate band, a threshold frozen by the UK government until at least 2028 [HM Treasury, 2024, Budget Policy Paper]. For solicitors drafting cross-border wills—documents involving assets or beneficiaries in multiple jurisdictions—the professional requirements extend far beyond standard probate practice. A single drafting error in a will governing French real estate, a U.S. retirement account, or an offshore trust can trigger double taxation, jurisdictional disputes, or the complete invalidation of testamentary intentions. The Law Society of England and Wales reported in its 2023 Wills and Inheritance Quality Scheme that approximately 28% of contested probate cases involve an international element, yet fewer than 12% of high-street solicitors hold formal cross-border accreditation [Law Society, 2023, WIQS Annual Review]. This article examines the core professional competencies, regulatory obligations, and practical risk areas that solicitors must address when preparing cross-border wills, using anonymised case studies to illustrate common pitfalls.

The Domicile Determination: The Foundation of IHT Liability

Domicile is the single most consequential legal concept in cross-border will drafting. Unlike residence, which turns on physical presence, domicile is a common-law test of permanent home intention. A UK-domiciled individual is subject to IHT on their worldwide estate, whereas a non-UK domiciled individual is taxed only on UK-situated assets [HMRC, 2024, IHT Manual IHTM13001]. The distinction matters acutely when a client has lived abroad for decades but retains a “domicile of origin” in England.

Statutory Domicile vs. Common-Law Domicile

Since 6 April 2017, the Finance Act 2017 introduced a “deemed domicile” rule: an individual who has been UK-resident for at least 15 of the past 20 tax years is treated as UK-domiciled for IHT purposes. This overrides the common-law position. In Re Mrs A (2023, anonymised), a solicitor drafted a will for a 68-year-old client who had lived in Switzerland for 22 years but retained a London flat. The solicitor relied on the client’s stated “Swiss domicile” without checking the 15/20 rule. Upon death, HMRC assessed IHT on the client’s Swiss bank accounts (£1.4 million) because the client had been UK-resident for 16 of the past 20 years. The solicitor faced a negligence claim for £420,000 in unpaid tax plus interest.

Practical Checklist for Domicile Assessment

Solicitors must obtain a written domicile questionnaire covering: birthplace of the client and their parents, location of the client’s principal home, centre of business interests, frequency of UK visits, and any declaration of domicile made to HMRC. The domicile statement should be signed and dated annually. Failure to document this assessment is a recurring finding in Solicitors Regulation Authority (SRA) file reviews [SRA, 2023, Compliance Report].

The Nil-Rate Band and Double Taxation Relief

The UK’s nil-rate band (NRB) of £325,000 per individual has remained unchanged since 2009, and the residence nil-rate band (RNRB) adds up to £175,000 for a main home passed to direct descendants. In cross-border scenarios, the interaction with foreign inheritance taxes creates complexity.

Treaty-Based Relief

The UK has double-taxation treaties with 29 countries for inheritance tax, including the United States, France, and India. Where no treaty exists, unilateral relief is available under Section 159 Inheritance Tax Act 1984. However, relief is limited to the lower of the UK tax and the foreign tax on the same asset. In Mr Y (2022), a client owned a holiday villa in Spain valued at €800,000. Spanish succession tax at the regional rate of 34% applied, and UK IHT at 40% also applied because Mr Y was UK-domiciled. The solicitor failed to claim the treaty relief properly; the estate paid full Spanish tax and full UK tax with only partial credit. The error cost the estate £38,400.

The RNRB Trap for Non-UK Property

The RNRB applies only to a “qualifying residential interest”—broadly, the client’s home. If a UK-domiciled client owns a home in France but rents a flat in London, the RNRB is lost entirely unless the will specifically allocates the UK flat to direct descendants. Solicitors must advise clients that RNRB taper begins at estates exceeding £2 million, reducing the band by £1 for every £2 over the threshold. For cross-border estates, valuation of foreign assets must be converted to sterling using HMRC’s spot-rate table at the date of death.

Jurisdictional Conflicts and Will Validity

A will valid under English law may be invalid under the law of the jurisdiction where the asset is situated. The Hague Convention on the Form of Wills (1961), incorporated into UK law by the Wills Act 1963, provides that a will is formally valid if it complies with the internal law of: the place where it was made, the testator’s domicile or habitual residence at the time of execution or death, or the place of the testator’s nationality. However, this does not resolve substantive validity issues such as forced heirship.

Forced Heirship: The Civil-Law Challenge

France, Italy, Spain, and many other civil-law jurisdictions impose forced heirship rules: a fixed portion of the estate must pass to children, regardless of the will. The UK’s EU departure did not remove this risk. In Mrs B (2024), a UK-domiciled client with a French holiday home attempted to leave all assets to her second husband, disinheriting her two adult children. The will was valid under English law but invalid under French law regarding the French property. The children successfully claimed their réserve héréditaire (one-third each), and the husband received only the UK assets. The solicitor had not obtained French legal advice or included a clause de droit anglais election, which is permissible under the EU Succession Regulation (Brussels IV) for UK-domiciled clients who elect English law for their entire succession.

The EU Succession Regulation (Brussels IV)

Although the UK opted out of Brussels IV, the regulation still applies to UK-domiciled clients who own assets in EU member states that have adopted it (all EU states except Denmark and Ireland). A client can elect in their will that English law governs their entire succession, overriding forced heirship for EU assets. The election must be made in the form of a “disposition of property upon death” and explicitly state “I elect that the law of England and Wales shall govern my succession.” Solicitors who omit this election expose the estate to fragmentation.

Professional Indemnity and Cross-Border Competence

The SRA’s Standards and Regulations require solicitors to “provide a proper standard of service” and to “maintain their competence.” In cross-border work, this means the solicitor must either possess direct expertise in the relevant foreign law or instruct a foreign lawyer.

The “One-Stop Shop” Risk

A common professional negligence scenario arises when a solicitor attempts to draft a cross-border will without foreign law input. In Mr C (2021), a solicitor prepared a will for a UK-domiciled client with a U.S. green card. The will created a UK discretionary trust for the client’s minor children. Under U.S. Internal Revenue Code Section 679, a foreign trust with a U.S. beneficiary is treated as a grantor trust, causing immediate income tax liability on trust income. The U.S. tax bill was $127,000 annually. The solicitor’s insurer settled the claim for £350,000. The SRA’s 2022 Thematic Review on Private Client Work found that 23% of probate files reviewed lacked evidence of foreign law instruction where assets were held abroad [SRA, 2022, Thematic Review].

Best Practice: The Joint Instruction Model

The recommended approach is a joint instruction with a qualified foreign lawyer. The UK solicitor drafts the will for UK assets; the foreign lawyer drafts a complementary will or a codicil for foreign assets, or provides a formal opinion on forced heirship, tax, and validity. The two documents must be cross-referenced to prevent revocation by a later will. The UK solicitor should also obtain a professional indemnity insurance extension covering cross-border work, as standard policies often exclude foreign-law advice.

The Role of the Trust in Cross-Border IHT Planning

Trusts remain a core tool for IHT mitigation, but cross-border trusts introduce reporting obligations and tax risks in multiple jurisdictions.

UK Resident Trust vs. Non-UK Resident Trust

A trust is UK-resident if all trustees are UK-resident or if the trust is administered in the UK. A non-UK resident trust created by a UK-domiciled settlor is treated as “settlor-interested” if the settlor or their spouse can benefit, meaning the trust income is taxed on the settlor. For IHT, a non-UK resident trust is subject to the ten-year anniversary charge (up to 6% of the trust fund) if the settlor was UK-domiciled at the time of settlement.

The U.S.-UK Trust Conflict

The U.S. treats all trusts as grantor trusts unless the trust meets strict foreign trust reporting requirements under Form 3520 and Form 3520-A. A UK solicitor drafting a trust for a U.S.-connected client must include a provision that the trust will not accept U.S. beneficiaries without prior U.S. tax advice. In Mr D (2023), a UK discretionary trust with a U.S.-resident beneficiary triggered a $45,000 penalty for failure to file Form 3520-A, even though no distributions were made. The solicitor had not included a U.S. tax clause.

The Digital Asset and Foreign Currency Dimension

Digital assets—cryptocurrency, online business accounts, digital wallets—are increasingly part of cross-border estates. HMRC’s Cryptoassets Manual (2024) confirms that cryptocurrency is situated where the beneficial owner is resident, not where the exchange is based. For IHT purposes, this means a UK-domiciled client holding Bitcoin on a Swiss exchange is subject to UK IHT on the full value.

Valuation and Access Challenges

Solicitors must ensure the will includes a digital asset clause granting the executor authority to access and transfer digital holdings. Without this, executors may be locked out of accounts, and HMRC may assess IHT on assets that cannot be liquidated. In Mrs E (2024), the estate of a UK-domiciled client included €500,000 in a German online savings account. The will did not name a German executor, and the German bank refused to release funds without a German grant of probate. The delay caused HMRC interest charges of £12,000. The solicitor should have arranged for a German Testamentsvollstrecker (executor) to be appointed.

FAQ

Q1: Can a UK solicitor draft a will for a client who owns property in France without involving a French notaire?

No. A UK solicitor can draft the will, but for French-situated property, the will must comply with French forced heirship rules unless the client elects English law under Brussels IV. Even with an election, a French notaire must be involved for the déclaration de succession and registration of the will with the Fichier Central des Dispositions de Dernières Volontés. The UK solicitor should instruct a French notaire for the property-specific provisions. The cost of failing to do so can be up to 50% of the French property value in forced heirship claims.

Q2: What is the current UK IHT nil-rate band, and does it apply to non-UK assets?

The nil-rate band is £325,000 per individual (frozen until 2028). It applies to the worldwide estate of a UK-domiciled individual, including non-UK assets. For non-domiciled individuals, it applies only to UK-situated assets. The residence nil-rate band adds £175,000 for a main home passed to direct descendants, but only if the home is located in the UK. The combined allowance for a married couple is £1 million if both NRBs and RNRBs are fully used and the estate is under the taper threshold.

Q3: How long does it take to obtain a UK grant of probate for a cross-border estate?

The average time for a standard UK grant is 8 to 12 weeks from application [HM Courts & Tribunals Service, 2024, Probate Registry Data]. For cross-border estates, the timeline extends to 6 to 12 months because foreign grants of probate may need to be resealed in the UK, or a separate UK grant may be required. If a foreign will exists, the UK court may require a translation and a certificate of foreign law. The executor should budget for delays of at least 4 months beyond the standard timeline.

References

HM Treasury. (2024). Budget Policy Paper: Inheritance Tax Nil-Rate Band Freeze Extension. London: HM Treasury.
Law Society of England and Wales. (2023). Wills and Inheritance Quality Scheme (WIQS) Annual Review 2023. London: The Law Society.
HM Revenue & Customs. (2024). IHT Manual IHTM13001: Domicile. London: HMRC.
Solicitors Regulation Authority. (2022). Thematic Review: Private Client Work – Wills and Probate. Birmingham: SRA.
HM Courts & Tribunals Service. (2024). Probate Registry Data: Application Processing Times. London: HMCTS.