We recently hosted a fantastic webinar with Stephanie Hutton of Jones Whyte in our Expert Webinar series. She discussed the importance of considering cross border Wills and the nuances attached to them. The webinar concluded with a number of fascinating questions diving into current cases, previous examples and general insight from a leading partner in the space. See below some of the questions and Stephanie’s response to them:
Question: Coincidentally, I received an enquiry this morning for an Estate where there is a Scottish Will but the deceased, was English, was domiciled in England and only had assets in England. Do you have any advice as to how to apply for a Grant of Probate in the English courts for the Estate? I’m a Solicitor practising in England. Thanks
Answer: The solicitor who has asked that question requires a statement or an affidavit from a Scottish qualified solicitor confirming that the Will is valid and meets the requirements under the Requirements of Writing (Scotland) Act 1995. The application to the probate registry can be online. As part of the application, you must specifically state that you are enclosing Form of Opinion by a Scottish Solicitor confirming the validity of the Will. You confirm that you are relying on S.1 Wills Act 1963, which states that; A will shall be treated as properly executed if its execution conformed to the internal law in force in the territory where it was executed, or in the territory where, at the time of its execution or of the testator’s death, he was domiciled or had his habitual residence, or in a state of which, at either of those times, he was a national. This is certainly something that our team can assist with as and when this arises for any of the attendees should they come across this scenario.
Question: If you have a couple where one is domiciled in the UK and one is domiciled outside the UK – what are the options re: inheritance tax
Answer: The UK domiciled client can give any value of their assets to the non-UK domiciles spouse free of IHT. The worldwide assets of the non-UK domiciled individual will be within the scope of IHT, although the nil rate band and other reliefs or exemptions will be available. This is subject however to a cap on the spouse exemption when a UK domiciled individual gives assets to a non-UK domiciled spouse or civil partner. The capped spouse exemption is aligned to the nil rate band and so is currently £325,000. The spouse exemption is used against any gifts made to a non-UK domiciled spouse or civil partner, whether or not these are during the seven years prior to death.
Non-UK domiciled individuals who have a UK domiciled spouse or civil partner can elect to be treated as domiciled in the UK for IHT purposes only (i.e. not for other taxes such as income tax or capital gains tax). This enables assets to be transferred between spouses or civil partners free of IHT, but means that the worldwide estate of the individual who makes the election is within the scope of IHT. The election needs to be made in writing to HMRC. There is no prescribed form, though HMRC request that certain information is included in the election. It can be made any time after marriage or registration of civil partnership. Elections can be made by the non-UK domiciled individual either during the lifetime of the UK domiciled individual or following his or her death. In either case the election can be backdated to apply from an earlier date and so any gifts which were made from the date specified in the election should benefit from the uncapped spouse exemption available to UK domiciled couples. If an election is made now and backdated the earliest date it can apply from is the later of (i) the date of marriage or registration of civil partnership or (ii) up to seven years before the date the election is made (in the case of a lifetime election) or up to seven years before the date of death of the UK domiciled individual (in the case of a death election). If an election is made, the result is that the UK domiciled individual can give any value of assets to their non-UK domiciled spouse or civil partner IHT-free. The worldwide assets of the non-UK domiciled individual will be within the scope of IHT, although the nil rate band and any other relevant reliefs or exemptions will be available.
The income tax and capital gains tax position of the non-UK domiciled individual who makes the election will be unaffected.
Question: Do you have any views on the current challenge in the France Court against the Brussels IV Regulation? Due to this I’m currently reluctant to allow a client to rely on this regulation in their English Will as to the devolution of their French assets and now insisting that a Will is prepared by a notary in France
Answer: For everyone’s reference/benefit, in November 2021, France introduced a new rule relating to succession which seems to contravene the Brussels IV regulation.
You will recall that I advised in the webinar that the purpose of Brussels VI was to introduce rules to ensure that the estate of any deceased individual should be dealt with according to the law of only one (EU) jurisdiction, regardless of where assets of the estate may be located across EU countries. I mentioned that this would circumvent the forced heirship rules.
I also highlighted that in Scotland as well as England and Wales, we have testamentary freedom that reigns supreme. As a result, spouses and children of a deceased individual have no automatic right to a portion of the estate.
In basic terms, where a valid choice of ‘English’ (or, indeed, Scottish) law has been made by an individual, the courts here are prevented from deferring to the succession rules in any foreign EU jurisdiction. This is the case regardless of whether property in the estate is located in France, Spain, or any other country. The law validly ‘chosen’ by the individual must be applied.
Now turning to the challenge to this regulation by France. In November 2021, France implemented new rules domestically which dictate that: –
(i) where a deceased individual or any of his children are nationals of or resident in an EU member state; and (ii) the (non-French) law applying to succession of the estate does not protect a specific portion of the estate for the deceased’s children then the children may be compensated from any property held in France.
Not only that, but France has actually imposed an obligation on notaries in that when a notary now becomes aware that heirs are not protected by the proposed distribution of the estate, French law dictates that they must actively inform those heirs of their rights to a reserved portion. So, on this basis, an English national enjoying retirement for example abroad would still be able to prepare an English will, making a choice of English law, disinheriting their children. Yet French rules would undermine the content of that will, and the application of English law. It is my opinion that this seems to contradict Brussels IV. It threatens to affect any succession in which the deceased or their offspring have a connection with an EU member state.
According to reports, the EU Commission has instigated an investigation into the new rule’s compatibility with the EU Succession Regulation. The conclusion of this investigation, and how swiftly it will be reached, remains to be seen. In reality, it may be that it is not until a particular case challenging a distribution under the rule makes it all the way to the European Court of Justice that we’re in a better placed to understand the weight that will be given to the French rule.
My suggestion in the meantime would be for any clients to make sure if they have assets abroad that a Will has a valid ‘choice of law’ in a Will, which remains the strongest possible statement you can make to determine your succession regime. When doing this, considerations should be made to the clients’ own residence, family connections to other jurisdictions, and any lifetime planning a client may wish to undertake in the future, alongside the taxation implications of all of the above.
Question: As someone who deals with workers offshore in the oil industry, should they die on a platform in the North Sea, but not in UK waters – would the legal claim be (a) within any national waters, e.g. Norway (b) whoever owned the platform as regards as offshoot of that country where the company located, or a UK will would suffice all round.
Answer: This generally speaking would be out with my expertise as a private client non litigation solicitor. Having said this, I have consulted with our head of personal injury team who has confirmed that the jurisdiction that would apply would be based on where the accident happened in terms of an actual action or claim. There could be scope for a court to make a decision on the basis of forum non convenience to apply. On the subject of succession law however, as a starting point it would be a matter of determining domicile as to which jurisdiction would apply rather than where the deceased domiciled.
Question: Would an expression of wish lodged with a UK will also hold sway in another location as to why certain persons excluded or assets divided?
Answer: As a starting point, this answer is caveat to the fact that I am not aware of the location the other assets are held for this question and what caveats could apply. For example, is the location of assets somewhere that has the equivalent to a survivorship clause on a title (Scottish) or joint title (England) with another proprietor and it is a property that is being left? Ultimately however, this again would come back to a matter of domicile and what succession laws would apply. We would recommend a memorandum of wishes is limited in usage however this certainly would do no harm in expressing the wishes stipulated.
Question: If a non-UK domiciled but has UK assets, how would you advise drafting their foreign Will or should they do UK Will?
Answer: Where the deceased is domiciled in a non-UK commonwealth Country and resealing a grant of probate, the legal process in the UK would become more complicated. We would recommend a Will to simplify the process either. Careful consideration should be made when drafting the Will to the extent that you would want to ensure that the UK Will does not indirectly revoke the non-UK Will. We would also suggest that a choice of law to apply is stipulated in the Will for the avoidance of doubt.
Question: A friend from England, his wife, her sister and her husband bought a property in Scotland and had been living there since around 2006. Unfortunately, when they bought the property for easiness it was put in the sole name of his wife, even though they had all paid the same amount for the property. What would be the process here?
Answer: There are a few points that require to be considered here. Is there a valid Will in place for the Wife who has the house in her name? Confirmation will definitely be required here for the property to be sold (Scottish equivalent to probate). What could be a risk here is that in the absence of any valid Will and subject to the value of the property, this could end up being inherited by the surviving spouse. A couple of options if the wishes of all parties is to have the property owned by all 4 is to have a minute of agreement along with a standard security (equivalent of a charge in England) registered on the legal title to have enforceability. Alternatively, it would be a transfer of title that would be taking place from the sole name to the names of all four parties. Lastly, if neither of these options are progressed then at the very least a Scottish Will stipulating the house legacy beneficiary relating to that asset should be created. That is certainly something that our team can assist with.
It was brilliant to have Stephanie Hutton join us on our latest expert webinar. Stephanie shared her invaluable insight and expertise, delving deep into the intricate world of Cross Border Wills, shedding light on the complexities and nuances that surround this important legal aspect. When conducting matters regarding Cross Border Wills, The National Will Register is an invaluable tool in making sure you have the most up to date Will and finding out where it is kept. Find out how we can help in the link below: