Workshop: Drafting wills with a foreign element

It is becoming increasingly common for an individual to establish themselves in multiple countries during their lifetime. The result is that for many people, country of birth can differ from country of employment and, in turn, differ from country of retirement and death. Along the way, that same person may be labelled with various notions of domicile, residence and citizenship.

The rules dealing with an individual's assets on death can be complicated, but there are some general rules of thumb and issues to be aware of. While not failsafe, if these are considered when a will is drafted, they limit the potential for any nasty surprises on the testator's death. Crucially, they should also help in sounding the alarm bells when specialised expert advice needs to be sought.

Establishing domicile

The answer to these questions will often be the same, but it cannot be taken for granted, for example an individual who moves abroad may well lose his domicile of origin if he intends to remain there.

UK situs assets are under the UK's jurisdiction regardless of the testator's domicile. If you are dealing with a foreign domiciled client the general rule is that their UK will should only deal with their UK assets. This may mean that they need wills in other jurisdictions. The key point about multiple wills is ensuring that none revokes any of the others. The benefits for the administration of the estate include the avoidance of complicated conflict of laws issues and not having to have a grant resealed in each jurisdiction concerned.

Care also needs to be taken with estate planning wills. A meticulously crafted structure for UK tax planning can completely unravel if there is a US element. Where you are dealing with a US client, separate advice will need to be sought to ensure US effective provisions.

It should also be noted that residence, ordinary or habitual residence and domicile can have different meanings in different jurisdictions.

Testamentary freedom

While there are no statutory limits on testamentary freedom in the UK, the same is not true of all jurisdictions. A number follow a forced heirship regime. While not all are alike, this usually involves the sharing of immovable property by the deceased's spouse and children.

A will drafted in the UK needs to comply with these rules if it is to be valid in the jurisdiction concerned. On the other side of the coin, beneficiaries from a forced heirship jurisdiction need to be aware that the rules would be difficult to enforce over UK situs property.

Another aspect to be aware of is the interaction with Shari'ah law. When dealing with Muslim clients or clients domiciled or resident in a Muslim state this issue is key and it may be necessary to seek specialist advice

If these issues are not considered, the ?will may be found to be ineffective in whole or in part in the jurisdictions affected, which can cause significant problems in administering the deceased's foreign assets.

Deconstructing estates

If the testator's will did not adequately deal with succession issues, there will be no alternative but to deconstruct the deceased's entire estate to determine which country has jurisdiction to deal with each and ?every asset. The concept of 'renvoi' can result in assets being 'passed' back and forth before it is determined whose rules will govern its succession. However, even in difficult cases there are some useful tools to cut down the delay.

A grant of probate in England and Wales does not require a will to be executed under the law of England and Wales. There is a list of countries and territories (predominantly Commonwealth) for which the will, so long as valid in those countries, can be used to obtain a grant.

Domicile is also a very important issue. At this stage as, it can not only have a significant impact on the governing law, but can also drastically alter the IHT position in the UK, it may be worth obtaining an expert opinion on domicile status at this point.

Succession regulation

The new EU Succession Regulation (Brussels IV) establishes common personal international law to achieve greater certainty for those dealing with the participating states. These are all 27 EU states with the exception of Denmark, the UK and Ireland. Therefore while not directly affecting UK property, it may prove useful in dealing with estates with multiple European states involved.