Therefore, if Mark and Mary retain their English property which is worth £1.25m and this property passes to the surviving spouse on the first death, this will be chargeable to UK inheritance tax when the second of them dies. They may both qualify for the main residence nil rate band (currently £175,000 each) if the UK property ultimately passes to their children or grandchildren, reducing the value charged at 40 per cent.
Mark and Mary may change their mind and decide to return to the UK many years later. In this situation their UK domicile of origin would revive on the day they returned here.
This would mean that their worldwide assets would be chargeable to inheritance tax. The situation is more complex for individuals born outside the UK, or those born in the UK but with a domicile of origin outside this country.
It is not even necessary for Mark and Mary to return to England for their UK domicile of origin to revive. If they decide to move from Greece to Italy, but do not intend to live in Italy permanently, their Greek domicile of choice could be treated as abandoned and if they do not acquire a domicile of choice in Italy, their UK domicile of origin would revive.
Lasting Powers of Attorney
Individuals deciding to move to Europe to live for an extended period of time should also consider the impact of doing so on their wills and lasting powers of attorney (LPA).
A person who has assets in a foreign jurisdiction, including in Europe, is likely to have already considered the various rules that apply to assets located outside the UK.
For example, French succession law dictates that assets located in France must be apportioned to various beneficiaries according to prescribed rules, known as the forced heirship rules.
This differs to the law here which gives individuals freedom of testamentary disposition - effectively allowing them to give their assets to whom they choose through their will.
An individual who lives in the UK and who has assets in Europe can override the law of a foreign jurisdiction by making an election in their will that UK law should apply to their foreign assets.
The effect of this being that the beneficiaries of the UK will would inherit the assets located abroad, rather than those assets passing to beneficiaries prescribed by local law.
However, the effectiveness of the election is partly dependent on to which country the individual is most closely connected at the time of their death.
This means that someone who completed a will when they had no intention of leaving the UK, but who subsequently moves to a European country may jeopardise the effectiveness of the election by ceasing to be closely connected to the UK.
