As more of us become internationally mobile and own assets overseas, many clients will require co-ordinated estate planning, using multiple wills, namely multi-jurisdictional and separate situs wills. Whether it’s opening a foreign bank account, buying a holiday Read more...
As more of us become internationally mobile and own assets overseas, many clients will require co-ordinated estate planning, using multiple wills, namely multi-jurisdictional and separate situs wills.
Whether it’s opening a foreign bank account, buying a holiday home, or setting up an offshore trust, owning assets in more than one country can leave loved ones to negotiate a complex, protracted and costly probate administration process.
A simple and practical advantage of having a will in each jurisdiction is that the lawyers in both jurisdictions can swiftly put the will through probate, or its local equivalent, as soon as they are aware of the death.
However, if there is just one will, it must be probated in the country where it was drawn, before the courts of that country can issue sealed and certified copy of it for use in the other jurisdiction and only then can the process begin there. Depending upon the size of the estate it can take a minimum of a year on average to process.
It is advisable to draw up multiple wills in each jurisdiction by experienced lawyers, making it easier to execute. This is important where estate taxes or inheritance taxes are an issue, because the lawyers drawing the wills will be able to advise on how to mitigate the taxes in that local jurisdiction.
Benefits of multi-jurisdictional and separate situs wills
Multi-jurisdictional and separate situs wills have some key advantages which include the following:
- For separate situs wills only, there is avoidance of unnecessary probate costs.
- In the case of separate situs wills only, there is use of local language and compliance with local form requirements and rules.
- Multiple wills are more efficient administration of estate assets located in particular jurisdictions.
- Greater capability to ensure that the testamentary documents are valid, and thereby give effect to the testator’s intent.
Avoiding unnecessary probate costs
Separate situs wills can reduce the cost of probate fees. Limiting probate to assets covered by the will can avoid the possibility of local probate fees being charged on the worldwide estate, or probate fees being paid in multiple jurisdictions on the same assets.
This ensures privacy and confidentiality, as only assets and their value governed under the separate situs will need to be disclosed in the probate process, as opposed to worldwide assets.
By using a separate situs will, the administration of the local estate can be restricted to a smaller group of assets, creating efficiency in estate administration, as a separate situs can generally proceed directly to probate.
However, when only one will is used, which is governed by foreign law, it is necessary to enter a two-stage process which consists of waiting for probate of the will in the home jurisdiction and then proceeding by ancillary probate, comprising re-sealing of the will or another similar court procedure.
In addition, the local court may require the original will. If there is only one original will because separate situs wills have not been used, this can be problematic since:
- The original will may have already been submitted and retained by the court of the home jurisdiction granting original probate.
- If the original will has not been probated, it may not be desirable to have it retained by the foreign court.
Multi-jurisdictional and separate situs wills can help ensure that the will is formally valid and the assets are distributed as the testator intended. They can help ensure local formalities are carried out with regard to such matters as form and execution, which is particularly important where real estate is involved. In many jurisdictions, the local law where the real estate is located governs the formal validity of the will in respect of the real estate.
The use of a separate situs will allows for local law to be chosen to govern the will, thereby avoiding legal problems, including which law should govern interpretation of the will. Both types of will can be made substantively valid with regard to its provisions in accordance with local law and ensure that local law will give effect to the content of the will, and it can take into account local law on such matters as:
- How long income can be accumulated.
- Perpetuities, including the duration of any trust under the will and when assets must ultimately vest in the beneficiaries.
- Forced heirship among family members.
A separate situs can easily be drafted in the local language and comply with local form requirements. By using local language, you avoid the need for translation and compliance with local formal requirements and local ‘legal terms of art’ can ensure efficiency in dealing with local advisers and the court process.
In addition, local rules may require the executor to be a resident or require a foreign executor to post a bond.
EU Succession Regulation
In Europe, all countries (apart from UK, Ireland and Denmark) have opted into the EU Succession Regulation, known as ‘Brussels IV’. It states the laws of the country where someone habitually resided will apply to the property upon their death. The regulation aims to make it easier for individuals to plan their succession in advance and enables heirs to settle estates more quickly.
For example, if a UK national was habitually resident in England & Wales but owned property in France at the time of death, English succession law in theory should be applicable. However, as each situation has its own complexities, it would be advisable to make a ‘choice of law’ statement clearly in the will to ensure English law applies.
Always take advice from a lawyer in the country where the asset is located as to how that asset would be treated on death, along with clearly knowing what your domicile is. It is also crucial that the testator makes each lawyer aware of the existence of the other will(s) and so the lawyer includes an appropriate revocation clause which revokes only the wills that apply in the particular jurisdiction.