Richard Burton was an actor renowned for both his exceptional talent and his turbulent personal life.
He also offers a cautionary tale for expats when it comes to estate planning.
Despite his efforts to avoid UK inheritance tax (IHT), including living for more than a quarter of a century in Switzerland, Burton’s story reveals the complexities and pitfalls of domicile laws and their impact on inheritance tax (IHT).
The Dazzling Life and Unexpected Legacy of Richard Burton
Born in Wales, Richard Burton rose to fame as one of Britain’s most celebrated stage and screen actors.
However, his life was as dramatic off-screen as it was on it.
He was known for his lavish lifestyle and two roller-coaster marriages to Elizabeth Taylor.
In 1957, he moved to Switzerland and lived there until his death in 1984, at the age of 58.
For him, living in Switzerland was motivated by tax; he famously declared that “everyone should pay taxes – except actors”.
However, Burton’s plan to become a UK “non-dom”, and therefore avoid IHT on his estate, was flawed.
His argument wasn’t helped by stories that his coffin had been draped in the Welsh flag and that a copy of Dylan Thomas’s poems had been laid alongside him.
However, his real undoing was the fact that he had previously purchased burial plots for himself and Liz Taylor in Wales.
It was this that enabled HMRC to claim that he had always intended to return to the UK and was therefore deemed UK domicile.
As a result, his estate, worth about £5 million, was subjected to UK IHT, costing his heirs a hefty £2.4 million.
Domicile: More Than Just Residence
Burton’s case illustrates that domicile isn’t solely about where you live or where you own assets.
We all start out with a domicile and it is usually our place of birth and/or from where our parents originate.
It can be changed or contested but this is often incredibly difficult to achieve.
For Burton, despite the length of time he spent living overseas and his lack of UK assets, in the eyes of HMRC, his domicile remained the UK.
The implications for expats are significant. Even if you have lived abroad for decades, if HMRC deems you domiciled in the UK, your worldwide estate could be liable for UK IHT at 40%.
Lessons for Expats in Estate Planning
Burton’s story is a cautionary tale for expatriates navigating the murky waters of domicile and inheritance tax.
His experience underlines the importance of understanding and planning for the implications of domicile on one’s estate.
Here are five key takeaways:
1. Seek Professional Guidance
Navigating domicile and IHT issues requires expert advice. Misconceptions and assumptions can prove costly.
It can often be worth seeking a professional opinion on your current IHT tax liability
2. Regular Reviews Are Crucial
Circumstances change, and so do tax laws.
Regularly reviewing your estate plan with a professional can help identify potential risks and opportunities.
3. Documentation Matters
Keep detailed records of your assets, and be mindful of actions that could imply a tie to your country of origin, like purchasing burial plots.
4. Flexibility Is Key
Estate and succession plans should be adaptable to accommodate life changes and evolving tax laws.
5. Beware of Symbolic Gestures
Burton’s case shows how symbolic acts, such as a burial plot purchase or the choice of a coffin flag, can have significant legal implications.
If you are thinking of having your ashes sprinkled on the turf in the stadium of your favourite football team, think twice.
Conclusion: A Cautionary Tale for Expats
Richard Burton’s life and death teach us that effective estate planning is not just about drafting a will or moving abroad – if you think that simply living outside the UK is going to do it, then you are in for a nasty surprise.
Successful estate planning entails understanding and navigating the complex web of laws that govern domicile and inheritance tax.
As expats, we need to be vigilant and proactive in managing our estate to ensure that our wishes are honoured and our beneficiaries are protected from unforeseen tax liabilities.
