Gavin Faber and Gillian Coverley, of Irwin Mitchell, explain the challenges of international estates for probate practitioners.
Many UK residents choose to relocate in search of warmer weather, and to pursue their dreams of a better life.
In fact, according to recent figures, over 5 million people have left the UK to set up a life in another country. This means that it’s becoming increasingly common for someone to be living in one country and have assets or property elsewhere in the world.
When a person dies, in the majority of cases, it can be straightforward to administer an estate and resolve tax liabilities when both the deceased and their assets are located within the same country. However, once there becomes some form of separation, numerous issues can arise.
Cases that involve international estates can provide an interesting challenge for probate solicitors. Indeed, many disputes between family and dependents of the deceased follow in circumstances when a person fails to make plans to account for their assets in multiple jurisdictions.
Domicile
The concept of domicile on the face of things appears to be relatively straightforward. But it becomes rather complicated when individual situations are taken into account.
The basic rule in law is that every person has a domicile and, as such, a person can only be domiciled in one country at any given time. The starting point when considering someone’s domicile is to establish their father’s domicile on their date of birth, their ‘domicile of origin’. Most people maintain their domicile of origin, however it is possible to lose this and adopt a domicile of choice or a domicile of dependence.
Social reality does not, however, necessarily correspond with these rules. For example, a person may have no permanent home, but must still have a domicile in the eyes of the law. Likewise, a person may have several places that they consider to be their home, but they may only be domiciled in one of those.
The rules may therefore dictate that a person is domiciled in a place that they do not consider to be their home. In other words, much comes down to a person’s actions and intentions before their death, and proving domicile ultimately depends on the evidence available at the time.
The case of Morris v Davies highlights this issue as the domicile of the deceased was disputed. The deceased, who previously lived in England, moved to Belgium in 2001 and worked in France. He continued to own a property in England, which he visited for a few weeks a year. The court held that he retained his domicile of origin in England, and his English will was valid.
Validity of will/provisions of intestacy
Once the issue of domicile has been resolved, difficulties may then arise in proving the validity of the will or, if no will was made, determining who is entitled to the estate under the rules of intestacy.
For example, if a will is made and, regardless of domicile, the provisions of the Wills Act 1963 have been complied with, it may be possible to apply English law. This may occur in instances when a person made a will while they were living in England and Wales and can demonstrate a suitably close connection to the country. If this can’t be proven, then it is likely that the law applicable will be the law of the country in which the deceased was domiciled. In this instance, the probate registry will need evidence that the will was legally valid in that country and so a certified copy, along with a translation if appropriate, will need to be provided.
The EU Succession Regulation (650/2012) (Brussels IV) covers the jurisdiction, applicable law, recognition and enforcement of decisions in matters of succession. Although the regulation has not been ratified in the UK, it will have implications if clients die in an EU country.The rules in this area do of course differ by jurisdiction and for the EU this new directive makes things even more uncertain.
For deaths after August 2015, there will be 2 tests to govern succession in those member states that have ratified the regulation: is there a will, and has a choice been made in that will as to applicable laws (eg if the deceased died in Spain, does the will state whether English law or Spanish law applies). If not, or if there is no will, a ‘habitual residence’ rule applies automatically and the succession is governed by the place in which the deceased was habitually resident.
It is still uncertain as to how these regulations will be interpreted and how the interaction will be with assets and wills held in the UK.
Obtaining a grant
If the deceased did die domiciled abroad with assets or property in England and Wales, it must be considered who is entitled to take a grant of probate to administer the estate. This is particularly important, because banks and other relevant financial institutions will require an English grant of probate as authority that a person is entitled to deal with the deceased’s money or assets, and may not release funds until they have seen evidence of this.
The rules differ from the usual rules where the deceased died domiciled abroad. Rule 30 of the Non-contentious Probate Rules 1987 dictates who, in these circumstances, is entitled to take a grant.
Challenging a will or the distribution of an estate
Under English law, a person is free to leave their estate to whoever they wish. However, under the Inheritance (Provision for Family and Dependants) Act 1975, a person may challenge a will or the distribution of an estate on the basis that they have:
- been excluded from it
- not inherited at all
- have not inherited as much as they need
The act sets out strict rules as to who is an eligible claimant, and the circumstances in which they are entitled to bring a claim.
For example, a son or daughter of the deceased who had been maintained by the deceased prior to their death, and who has been subsequently excluded from the will, may bring a claim under the act. If successful, they may inherit part of the estate which they would not have otherwise been entitled to. If, however, the deceased was domiciled abroad, then regardless of the location of the potential claimant, the act prohibits a claim being made against the estate. This may mean that a person is significantly financially worse off, struggling to support themselves and reliant on the laws of a foreign country that may be different to those of England.
Likewise, the provisions of English law which enable a person to challenge the validity of a will may also not be relevant if foreign law is applied. In situations such as these, disputes may arise, because certain countries have different rules as to how estates should be distributed, and these may not be in accordance with the provision of an English will.
In England and Wales, you can challenge a will on the basis that the deceased lacked testamentary capacity, was subject to undue influence or did not know or approve the content of a will. If foreign law is relevant, these arguments may not be available, and this may also lead to subsequent disputes or again, leave a family member or dependent of the deceased without the recourse they need.
International estates are complex, as are the rules that decipher how they must be administered. As a result, disputes invariably arise that can destroy relationships and may be extremely costly. It is therefore vital that the necessary steps are taken to carefully plan what will happen to assets when multiple jurisdictions are involved, before it’s too late.
Gaining specialist advice from the outset from legal experts on wills which involve such estates can go some way towards mitigating the risks of disputes arising. As a general rule, you should take advice in the country in which you hold assets and if advised to do so, make a will there.
For situations where it is already too late and problems have emerged, you should seek advice from lawyers regarding options to launch a challenge.
About the author
Gavin Faber is a partner in the contentious trusts and probate team at Irwin Mitchell, and Gillian Coverley heads the wills and probate team.
Publication date: 8 July 2015