Increasingly individuals have assets in more than one country which can create complex cross border succession and taxation issues on death.
Jan Atkinson, head of the Wills, Probate and Disputed Estates department at Osbornes is a specialist dealing with cross border estates in countries including the UK and Australia, Europe (Germany, Spain, France and Italy), India, Hong Kong, Singapore, The United States and Brazil.
Where a person dies owning assets in two or more countries, it is frequently necessary for probate or the equivalent to be obtained in both or all countries where the assets are situated. For example, if a person dies domiciled in Germany holding assets in England and Germany, it will be necessary to go through two separate procedures to release the assets. In Germany, the beneficiaries of the German estate will need to obtain a Certificate of Inheritance known as an Erbschein to enable the German estate to be released. A separate Grant of Probate, or Letters of Administration if there is no Will, will need to be obtained in England to secure the release or transfer of the English assets.
A slightly different process should be followed when a person dies with assets, say, in Australia and England. If a Grant of Representation has been obtained in the relevant Australian state, the Colonial Probate Acts permit the resealing of that Grant in England and Wales. Countries and territories covered by these Acts include New Zealand, Canada, Australia, Hong Kong, Singapore, South Africa, St, Lucia, Jamaica and the Bahamas.
To obtain a resealed Grant, the following documents are required:-
- Original Colonial Grant or, more likely, a Court sealed and certified copy, or an Exemplification of the Grant.
- A Court sealed and certified copy of the Will and two photocopies.
- A written request from the personal representatives named in the Grant asking for the Grant to be resealed.
- The appropriate HMRC form duly completed. The appropriate form depends on the value of the estate and whether the deceased had ever lived in England and Wales.
- The appropriate fee payable to HM Courts and Tribunal Service.
Conflicting national laws often apply when a person dies leaving assets in more than one country. Different countries recognise different concepts which influence succession to the deceased’s assets. For example, England recognises the concept of domicile, France, Belgium and Denmark apply the concept of habitual residence and other countries, such as Spain, Portugal, Germany, Austria, the Netherlands and Italy, apply the concept of nationality. The interconnection between these concepts and their application to succession is complex and clients need to ensure that the advisor they appoint has specialist knowledge of the succession rules of each country and how they interact with each other.
Once the client’s domicile, habitual residence or nationality have been ascertained and the situs, i.e. location of their assets is known, then further investigations are necessary to determine whether the relevant countries have one law governing succession to moveable assets and another governing succession to immovables, i.e. a house or flat.
Some countries, such as Spain and Germany, do not recognise the concept of personal representatives or estate administration. When someone dies the heirs usually appear before a Notary to accept their inheritance direct, rather than it being dealt with by Executors or the administrators of an estate, which is what happens in England and Wales.
The concept of forced heirship applies in some countries, in particular France and Germany, where, irrespective of the terms of any Will, certain specified parts of an estate pass to particular beneficiaries, usually the surviving spouse and children.
All of these concepts need to be considered and appropriately applied in relation to international estates, insofar as appropriate. All this is complicated and matters of private international law and conflicts of law may be relevant in such international situations and need to be clarified and fully understood.
According to the European Commission, 450,000 cross border successions occur in the EU every year, representing an estimated value in excess of €120 billion.
In an attempt to simplify cross border successions, new European Union Rules adopted on 4 July 2012 intended to make it easier for European citizens to deal with the legalities of an international Will or succession matter. There is to be a transitional period and most of the new rules are to be applicable to these successions from 17 August 2015.
These new rules of Regulation (EU) No. 650/2012 are designed to ensure that:-
- A succession is treated coherently under a single law and by one single authority;
- Citizens are able to choose whether the law applicable to their own succession should be habitual residence or nationality;
- Parallel proceedings and conflicting legal decisions in more than one country are avoided;
- There is mutual recognition of decisions relating to EU succession;
- A European Certificate of Succession is to be created to enable a person to prove status and rights as a beneficiary or administrator of an estate.
Notwithstanding this, some issues will continue to be governed by national rules and in any event the United Kingdom is not currently intending to subscribe to the European Council’s new rules which are known as Brussels IV. The idea behind them is to make it easier for European citizens to deal with the legal side of an international Will or succession issue, i.e. where the rules of more than one country are relevant. The intention is to provide a single set of rules for determining both jurisdiction issues and the relevant law applicable to cross-border estates, with the deceased’s habitual place of residence at the date of death as the determining factor, thereby making it simpler to settle international succession issues.
More than one will?
Prudent estate planning means that it is often a good idea for there to be one international Will covering the testator’s assets in the country where most of them are situated, with a separate local Will just dealing with the few assets owned in another country. Great care must be taken to ensure that the later Will does not revoke the earlier Will and that there is no conflict between the two. Again, specialist advice should be taken to ensure the appropriate form of Will in each country is drawn up.