CROSS-BORDER ESTATES
It is a truism that human beings live in a global village. Rising affluence, increased mobility and growing interconnectivity have enabled people transcend their local neighbourhoods and interact and integrate with people, corporations and governments of different nations. It is not uncommon for individuals to own holiday homes abroad, to operate bank accounts in offshore havens or to have investments in third countries. When a testator owns assets in multiple jurisdictions, complex issues are liable to arise in laying an estate plan or administering the estate. It may be that more than one testamentary document will be required to pass on one’s heritage. It may happen that the laws of more than one country will apply to the estate. It may transpire that more than one grant of probate or certificate of inheritance will be required to settle the estate. Adding another layer of complexity is the fact that the laws of different countries may have different rules for the devolution of moveable and immoveable assets. Complicating things even further is the fact that in many of the civil law jurisdictions there are forced heirship rules and matrimonal regimes in place which necessarily splinter an estate into a defeasible and indefeasible proportion. This effectively curtails the freedom of disposition of a testator with assets in such jurisdictions, although the effects thereof may be mitigated by smart estate planning.
An issue that is often easy to overlook, whether in the context of a domestic or multijurisdictional estate, is the effect of taxation on trusts and estates. Whilst there are a number of jurisdictions that do not apply inheritance or estate taxes, there are many more states which levy such taxes. Smart estate planning must necessarily take cognizance of the adverse and multiple impacts of estate and inheritance taxes with a view to minimising tax leakage.
JM Donnelly specialises in multijurisdictional estate planning and the administration of cross-border, cross-systemic estates. She is the author of a major text on international succession, entitled “International Succession: A Guide to Administration of a Cross-Border Estate”, published by the Ad Lucem Press (2024).
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