Dec 2013 | Conflicts of law lecture

This lecture was given to the students of the STEP/Law Society Diploma in Trust and Estate Planning for 2013/14 in Decmeber 2013. It deals primarily with conflicts of law but first deals with administration issues for foreign estates.

 

See pdf version here 

 

 

MODULE 2 – Wills and Probate

 

Session 4 Lecture 3

 

FOREIGN GRANTS

 

&

 

CONFLICTS OF LAW

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 November 2013

Aileen Keogan

Solicitor & Tax Consultant

www.aileenkeogan.ie

 

1.      Outline of today’s lecture

 

The purpose of this lecture is to outline to practitioners how to deal with foreign issues arising in succession planning and in administering estates.  This issue is occurring more frequently for practitioners as clients no longer confine their investments to the traditional stocks and shares of the UK or the USA but now have holiday homes and investment assets in Europe and further afield.  While the holiday homes or foreign property investments may have lost significant value in the economic downturn, they are not necessarily the easiest of properties to sell and therefore may be in the estate of a deceased for the Irish solicitor to deal with. In addition, as we know many non Irish nationals migrated to Ireland during the Celtic Tiger years, and many of these have remained in Ireland retaining assets from their national jurisdictions where such assets will need to be considered in the context of an Irish estate.

 

You will have just dealt with the procedures necessary to extract grants/letters of administration in Ireland.  An Irish grant of probate or letters of administration will only give authority to the executor(s) / administrator(s) to deal with assets in the deceased’s name situate in the jurisdiction of the Republic of Ireland.  Therefore, even if a Will deals with the worldwide assets of the deceased or the deceased dies intestate leaving assets worldwide, the authority of the Irish grant/letters is confined to authorising the personal representative to deal only with the assets situate in the jurisdiction of Ireland, whether the assets be moveable or immoveable assets, as that is all that the Irish High Court (Probate) has jurisdiction over pending clarification of private international law. 

 

We therefore need to consider how to take out grants/letters to the Irish Will in other jurisdictions so as to release assets from each such jurisdiction.

 

On the other hand we shall also consider how to extract an Irish grants/letters to a foreign Will to deal with Irish situate assets.

 

Separately we will consider the relevant law that governs the succession of a deceased’s estate.  In Ireland this depends on whether the assets in the estate are moveables (personal property) or immoveables (real property) and we will consider the application of private international law on this basis. We will discuss the different requirements for moveables and immoveables and also consider the provisions where the law of the domicile of the deceased should apply and where the law of the situs of the asset should apply. We will address the position where the other country will not recognise our distinction between moveables and immoveables and/or will not recognise domicile as the connecting factor to apply their law.  We will also deal with the forced heirship rules of various countries, including Ireland.

 

We therefore need to consider the following scenarios:-

 

·                     Releasing non Irish situate assets – a foreign grant for an Irish Will or intestacy

 

·                     Releasing Irish assets in the case of a non Irish Will/intestacy – an Irish grant to a foreign Will or intestacy

 

·                     The relevant law that governs the succession of the assets – the private international law on conflicts.

 

 

This lecture will not deal with the taxation implications of foreign assets as that is a lecture in itself and will be dealt with later on in Module 5.

 

 

2.      Releasing non Irish situate assets – a foreign grant

 

The Irish courts, and therefore the Irish Probate Office, do not have jurisdiction to grant authority to a personal representative to deal with assets outside of the Republic of Ireland.   Therefore in order to release assets abroad, the personal representative must ascertain from each institution holding a foreign asset what its requirements are to release the asset to the personal representative.  This can be time consuming but is an inevitable consequence of assets being situated abroad.

 

We will deal later with where assets should pass, whether under the Will or on intestacy, according to whichever jurisdiction has forum over the asset.  That is a matter of the interpretation of the correct succession of the asset and who should actually receive the benefit of the asset via the personal representative.  For the moment though, we are merely dealing with the procedural requirements as to how to physically release the assets to the personal representative.

 

2.1 Institutional discretion

 

It may be the case that in each jurisdiction where assets are situate, the relevant foreign institution which holds the assets will release the assets on foot of an Irish grant of probate or letters of administration.  Some institutions will, if the asset is not of significant value, be prepared to release the asset to the Irish personal representative or beneficiary merely on the production of the Irish grant/letters. However this is entirely at the discretion of the institution which has usually recognised that, as the asset is of minimal value, it would be too costly to extract a grant local to their jurisdiction and, in any event, if the asset is released to the wrong person, there is not much at stake.  To copper fasten its position though, the institution may insist on an indemnity being furnished by the personal representative and/or beneficiary to return the assets if subsequently the institution ascertains that it has released the assets to the wrong person.  To back up such an indemnity the institution may also require the indemnity to be countersigned by an insurance company for a fee, in effect taking insurance out that the asset has been released to the correct person. While this can be a cost, it is still usually much less than the cost of taking out the grant in that jurisdiction if the deceased died owning few assets in that jurisdiction. However if there are a number of different assets, all requiring indemnities with insurance to be paid for, consideration should be given to the total cost of such indemnities in comparison to the cost of taking out the foreign grant.

 

2.2 Foreign grants

 

If the institution insists on production of a grant in its local jurisdiction in order to release the asset, it is likely that the Wll / intestacy will have first been proven in Ireland (if the deceased was domiciled in Ireland holding most of his assets in Ireland).  In such a case, if the assets are in any of the jurisdictions of the United Kingdom or other common law countries, a “sealed and certified” copy of the grant and will of the deceased must be obtained from the Irish Probate Office.  Generally however (especially in many civil law jurisdictions such as in Belgium, Spain) the Will and grant must be authenticated in accordance with the Hague Convention of 5 October 1961.  This means that the Will and grant as issued by the Irish Probate Office must be certified by either a notary or a judge of the Irish High Court, the signature of the notary or judge must be confirmed by the Irish Department of Foreign Affairs and an apostille placed on the document by the Department as the form of authentication in accordance with the Hague Convention. This document is then part of the application to take out authority to release the assets abroad.  See www.hcch.net  and www.dfa.ie

 

Where appropriate, legal documents will need to be translated out of English into the foreign language. If so, the translation should be carried out by a person formally qualified to translate legal documents as usually an affidavit will be required from that person.  At a practical level, it is often better to arrange for the translation to be carried out in the foreign jurisdiction as generally the advisers in the foreign jurisdiction will have more experience in arranging translation from English than we have in Ireland and this can keep costs down!  Indeed in many jurisdictions there are formal court appointed translators familiar with translating Wills and grants.

 

If the grant has not already been extracted in Ireland, the relevant jurisdiction will likely require an affidavit of law setting out the Irish law, being the law of the domicile of the deceased, confirming that the personal representative is the person entitled under Irish law to take out the grant.

 

Each jurisdiction will have its own procedural requirements, the equivalent of our oath of executor, schedule of assets etc - often a lawyer in that jurisdiction will need to be employed to ensure the effective authority is obtained.

 

 

3.      Releasing Irish assets in the case of a non Irish Will/intestacy – an Irish grant to a foreign Will or intestacy

 

3.1              Institutional discretion

 

As mentioned above, some foreign institutions will, if the asset is not of significant value, be prepared to release the asset to the Irish personal representative merely on the production of the Irish grant/letters.  Likewise in Ireland, Irish institutions may release an Irish situate asset to a foreign personal representative or beneficiary without requiring the extraction of an Irish grant / letters.  Again this is entirely at the discretion of the institution, usually exercised where the asset is of minimal value, where it is recognised that it would be too costly to extract a grant in Ireland and where, in any event, if the asset is released to the wrong person, there is not much at stake. 

 

Similar to the foreign institution, to protect itself the Irish institution usually insists on an indemnity being furnished by the personal representative/ beneficiary to return the assets if subsequently the institution ascertains that they have released the assets to the wrong person.  Again to back up the indemnity sometimes the institution would also require the indemnity to be countersigned by an insurance company.

 

Prior to FA2010 the Irish institution was also likely to seek to obtain a certificate of clearance from CAT in respect of the asset held by them and in the form of a CA11.  However as secondarily accountability for the institution has been removed in respect of CAT payable on the asset this no longer applies. 

 

3.2              UK wills

 

If the institution insists on production of a grant in Ireland then the foreign Will must be proved in Ireland to take out an Irish grant and strictly speaking the solicitor acting for the executor should apply to the Probate Office in advance of preparing the papers for taking out the grant on foot of an affidavit of law. 

 

However it is generally accepted that in the case of a Will first proven in any of the jurisdictions of the UK (England & Wales, Scotland or Northern Ireland), the Probate Office will accept proof of the validity of the Will and grant issued from the court of any of the jurisdictions of the UK without the requirement for an affidavit of law.

 

3.3              Other foreign wills

 

3.3.1        Entitlement to extract

 

In all other cases the solicitor acting for the executor should apply to the Probate Office in advance of preparing the papers for taking out the grant for the Probate Office to consider the entitlement to extract the grant in question.  In such a case a sealed and certified copy of the grant that issued in the law of the domicile of the deceased should be furnished to the Probate Office.  It should be apparent on the face of that document that the applicant for the Irish grant is the person with the legal entitlement in that jurisdiction to the grant. If the executor or attorney on behalf of the executor is applying to take out the grant, no legal proof is required as his entitlement to extract is accepted by the Irish Probate Office.  Otherwise an affidavit of law from the jurisdiction where the deceased died domiciled must be furnished setting out the proposed applicant’s legal entitlement to the grant under the law of the domicile.  It is imperative that this affidavit not just sets out the entitlement to apply but also the legislation that gives such entitlement, which legislation must be quoted in full.  The affidavit should be made by a lawyer practising or who has practised in the relevant jurisdiction and who can confirm he is conversant with the succession laws of that jurisdiction.

 

However a foreign will does not always appoint an executor and a grant is not always issued on foot of a foreign will in the jurisdiction the will is first dealt with.  In many civil law countries there is no personal representative appointed to deal with the assets - the assets and liabilities can pass on death to the heirs subject to an option for them to reject the benefit.  Order 79 RSC provides that in such a case legal proof is required that the applicant is legally entitled to extract the Irish grant.  The law of the domicile of the deceased is the relevant law for such procedural purposes and the affidavit of law should set out an account of the procedures of proving the will in the jurisdiction and who is the person entitled to administer the estate.

 

Order 79 Rule 10 RSC provides that where relevant, legal documents will need to be translated out of the foreign language into English. If so, it is important to ensure the translation is carried out by a person formally qualified to translate legal documents as an affidavit will be required from that person.  Again at a practical level, it is often better to arrange for the translation to be carried out in the foreign jurisdiction as often the advisers in the foreign jurisdiction will have more experience in arranging translation to English than we have in Ireland and this can keep costs down. 

 

 

3.3.2        Formal validity of the Will

 

Separate to the question of who is entitled to extract the grant of probate is the question of the formal validity of the will.  Section 102 Succession Act 1965 provides that:-

 

“A testamentary disposition shall be valid as regards form if its form complies with the internal law –

 

a)      of the place where the testator made it; or

b)      of the nationality possessed by the testator either at the time when he made the disposition or at the time of his death; or

c)      of a place in which the testator had his domicile either at the time when he made the disposition, or at the time of his death; or

d)      of the place in which the testator had his habitual residence either at the time when he made the disposition, or at the time of his death; or

e)      so far as immoveables are concerned, of the place where they are situated.”

 

If e) is being relied on in relation to the disposition of Irish immoveable property, the grant will be limited to the immoveable property situate within Ireland.

 

Therefore, for example, if a French national living in Ireland makes a holograph will (a handwritten will made by him that is not witnessed), although this does not comply with the Irish formalities for wills, as it would be valid in France (of which he was a national), it can be proved as a valid will in Ireland.  This does not mean that a will that is not valid other than as to form can be proven in Ireland if it cannot be proven in the country of its domicile by virtue of it being essentially invalid in that country (e.g. a Will that has been revoked by the law of the country of domicile but not revoked by virtue of Irish law cannot be proven in Ireland).

 

The sealed and certified copy of the grant from the country of relevant connecting jurisdiction of the deceased is proof of the validity of the Will. Otherwise the proof required for the validity of the Will should be set out in the affidavit of law given to prove the entitlement to extract the grant. Usually the law of the domicile of the deceased is the law that is applied which matches the proof of the entitlement to extract the grant.

 

 

3.4              Foreign intestacies

 

Again the solicitor acting for the executor should apply to the Probate Office in advance of preparing the paper for taking out the letters of administration for the Probate Office to consider the entitlement to extract the grant in question. A sealed and certified copy of the foreign letters of administration that issued in the law of the domicile of the deceased should be furnished to the Probate Office.  It should be apparent on the face of that document that the applicant for the Irish letters is the person with the legal entitlement in that jurisdiction to the letters. Otherwise an affidavit or law from the jurisdiction where the deceased died domiciled must be furnished setting out the proposed applicant’s legal entitlement to the grant under the law of the domicile. 

 

The principles of international law are applied in ensuring that the correct person applies for the grant. In this regard where there is moveable property situate in Ireland, the application for letters of administration should be made by the person entitled to apply under the law of the domicile of the deceased. Where there is immoveable property situate in Ireland, the application for letters of administration should be made by the person entitled to apply under the law of Ireland. 

 

If the same person is entitled to apply for the letters for both the moveable and immoveable property, full (unlimited) letters of administration will issue to that person.  If different people are entitled, then separate limited grants will issue (one for the Irish situate moveable assets to the person entitled under the law of the person’s domicile and the other for the Irish situate immoveable assets to the person entitled under the Succession Act 1965, i.e. Irish law.)  This in fact rarely happens and, if it does arise and it is more cost effective to have the one person apply for both grants, an application to the Probate Office may be made for an order under section 27(4) Succession Act 1965 to have only one full grant issue.

 

If it is absolutely certain that the deceased held either only moveable assets or only immoveable assets, the application can be made to issue a limited grant for the relevant moveable or immoveable assets as the case may be (i.e. not bothering with the other type of asset).  Under Order 79 rule 5(8) the Probate Officer may in such a case permit this provided the application is made in advance of submitting the usual probate application papers and it is set out in a letter how the proposed grant is not necessary to prove of title to the estate.

 

 

4.      Conflicts of Law

 

We now have dealt with the procedural formalities of proving the will or taking out letters on intestacy.  However how the estate should be distributed once collected in by the person with the authority to deal with the estate depends on the relevant law that should apply to the estate. 

 

As we already know, whether a person has made a will providing for his spouse or not, under Irish law, the spouse has certain rights to inherit under section 111 Succession Act 1965.  In addition the Succession Act sets out specifically how the estate of an intestate should pass under Irish law.  How do these rules apply to foreign estates and to Irish estates of foreigners?  Are there similar ‘forced heirship’ laws that apply to foreign assets?

 

4.1       Connecting factors

 

When it comes to ascertaining what law should apply to the estate of a deceased, different jurisdictions look to different connecting factors and apply their laws according to whether the deceased fits into such factors.

 

The connecting factor for Ireland, as with many common law countries, is the domicile of the deceased.  Irish law provides that the lex domicilii determines the succession of moveable property whereas the succession of the immoveable property is determined by the law of the country where the property is situate (the lex situs).

 

In other jurisdictions, particularly many civil law countries, either the habitual residence or the nationality of the deceased determines the succession of moveable property and in some countries this factor also determines the succession of immoveable property.

 

Examples of the connecting factors in various countries are set out in Appendix 1.

 

4.1.1    Domicile

 

Domicile is a legal concept that is determined by reference to a person’s intention to permanently or indefinitely reside in a country and, in certain cases, actually physically having a presence there.  It is therefore somewhat of a subjective test, based on a person’s intentions, yet it is considered in an objective manner, proof being sought of how such intentions have been objectively demonstrated. There are three types of domicile that a person may have (though a person is only able to hold one domicile at any time).  These are the domicile of origin, the domicile of choice and the domicile of dependency. A person will always hold a domicile, even if on the facts of a case it may not be clear exactly which one it is!  There is no statutory definition of domicile – the rules regarding it have built up through case law.

 

A domicile of origin is the domicile a person is born with and, in the case of a person born within marriage, is that of his father; otherwise it is that of his mother.  A domicile of choice is the domicile a person acquires by actually residing in a country and having the intention to remain there indefinitely or permanently.  Where a domicile of choice is abandoned and a new domicile of choice is not acquired, the domicile of origin automatically revives, even if the person does not show any intention of returning to the domicile of origin and may never set foot in that country of origin.  A domicile of dependency is the domicile a minor holds if the parent’s domicile changes while he is still a minor; once that person becomes 18, it changes to a domicile of choice.  The domicile of dependency of a married women on that of her husband was abolished with effect from 1986 under the Domicile and Recognition of Foreign Divorces Act 1986 and subsequently that domicile was found to be unconstitutional since 1932 in the case of W v W 1993 2 IR 476.

 

As between common law jurisdictions the issue of domicile is not determined on universal rules.  An Irish court will determine a person’s domicile according to Irish law.  This finding will not take account of any determination by the courts of another jurisdiction. It is quite possible for an Irish court to hold that a person has an English domicile.  An English court may hold the same person, for its laws, has an Irish domicile.  A simple example of this arises in the case of a UK domiciled female who married an Irish domiciled male prior to 1974.  English law only applies an independent domicile to a married woman who married after 1974.  Those married before 1974 have a domicile of dependency whereas, as outlined above, Irish law no longer applies such a distinction. It is quite feasible for an Irish court, faced with such a situation, to hold that the married woman has an English domicile for Irish succession and for an English court to hold her to have an Irish domicile for such purposes.  In such cases the issue of renvoi is relevant. This is discussed later.

 

 

4.1.2    Habitual residence

 

Habitual residence is not universally defined (although it is hoped that under future EU succession legislation it will be defined for all EU member state succession purposes).  It is an objective question of fact as to where one’s habitual residence lies (unlike domicile which includes the subjective element of a person’s intentions).  In broad terms the test of a person’s habitual residence is the centre of a person’ s living (business, social and family life), the place with which the person is most closely associated in this pattern of life accompanied by a regular physical presences enduring for some time.  In practice, usually an opinion from a foreign lawyer would be required setting out why that person has been treated in that jurisdiction to hold habitual residence there.  A person can hold more than one habitual residence.

 

The EU test for habitual residence is based on the centre of a person’s interests rather than by a particular duration of residence.  A person can hold only one habitual residence for EU law purposes.  The test is applied in the EU for the purposes of allocating jurisdiction in relation to EU legislation e.g. the Brussels II 2000 Regulation on Jurisdiction and the Recognition and Enforcement of Judgements in matrimonial matters. Regulation on Succession (Brussels IV) has also applied an habitual residence test, see paragraph 5 below.

 

4.1.3    Nationality

 

In the 19th Century many civil law countries moved from applying the concept of domicile to the concept of nationality which is given to a person on birth or origin or by naturalisation.  It is possible for a person to have dual nationality and, if so, legislation is required to deal with the succession of assets, particularly if assets are held by the person with dual nationality in a third state.

 

4.2       Moveables/ immoveables

 

As mentioned above Irish law provides that the lex domicilii determines the succession of moveable property, whereas the succession of the immoveable property is determined by the law of the country where the property is situate (the lex situs).  This distinction is made by a number of countries which are called schismatic or divisional countries. Immoveables are in the opinion of the schismatic countries view best treated by the local law of a country where asset are situate irrespective of whether the person is a national or habitually resident or domiciled in another country. 

 

Other countries have one succession rule for both moveables and immoveables, where they treat the whole estate as passing the same way under the relevant jurisdiction.  This treatment is made by a number of countries which are called unitarian countries.

 

The list of which system various countries apply are set out in Appendix 1.

 

A unitary state may provide that the law of the last domicile or nationality is to govern moveable and immoveables.  A schismatic state may provide that the law of the domicile or nationality governs moveables and the lex situs governs immoveables.

 

Even where there are two schismatic states the local domestic rules on what constitutes immoveables may vary.  In Irish law leasehold property is personalty and is therefore moveable in theory.  However in De Fogassieras – v – Duport 11 LR IR 123 Warren J. held that leaseholds should be characterised as immoveable property.  Civil law systems rarely make a distinction between leasehold and freehold property. In addition local domestic rules throw up anomalies.  French law treats an interest in a time-share as a moveable.

 

4.3       Forced Heirship

Forced heirship is the term used where a state provides that specified persons have automatically rights to the succession of a portion of a deceased’s estate, taking precedence over any will of the deceased.

We are already familiar with the Irish position under Section 111 Succession Act 1965 giving a spouse a right to elect to take a legal right share.  In addition Ireland provides children with the right to claim for a share under Section 117 Succession Act 1965.

Most states give some protection to ensure that a deceased makes some provision for dependants.  Common law countries tend to do this by the application of court discretion whereas civil law countries give enforceable fixed shares.

Generally civil law countries allocate fixed percentages of the estate to children, parents and usually (though not always) a spouse. Often the beneficiary has a right to elect if there are separate rights given under a will of the deceased.  There are broadly two categories of jurisdictions which apply forced heirship rules:-

-           countries, e.g. France, which operate a system of strict forced heirship; and

-           countries, e.g. Germany, which confer indefeasible rights on certain family members who are entitled to a minimum statutory share, which, if they do not receive under the will or by gift beforehand, may claim against the deceased heirs.

Clawback provisions often feature in forced heirship regimes.  These provide that where a statutory heir is not able to received his correct share on the death of the deceased because the assets are eroded, assets given away during the deceased’s lifetime can be brought back into account for the purposes of calculating the share of the statutory heir.  We would be familiar with this in Ireland under section 121 Succession Act 1965 where assets divested by the deceased within 3 years of his death may be deemed to form part of the deceased’s estate if the court is satisfied that the disposal was made for the purposes of defeating or substantially diminishing the legal right share of a spouse or the intestate share of a spouse or children or of leaving any child insufficiently provided for.

In Spain, under its forced heirship regime, 2/3rds of a person’s estate must be distributed between forced heirs, who include direct descendants, direct ascendants and a spouse.  Half of this 2/3rds is distributed on a fixed basis between the forced heirs (the ‘compulsory one third share’) and the remaining half of the 2/3 rd share can be distributed to any of the forced heirs (but no others) at the discretion of the testator.  The spouse’s right within the compulsory one third share is to receive a life interest (usufruct) in the assets.  The remaining one third of the estate can be distributed freely by the testator.  Within Spain there are certain regions that do not apply the regime or have modified it (Navarra, Basque and Cataluña).  Interestingly though, foreign owners of assets in Spain are not subject to the Spanish succession laws but are subject to the laws of the country of their nationality.

In France, a testator has freedom of testamentary disposition over only a portion of his property while a specified portion ( the réserve héréditaire) devolves automatically upon persons prescribed by law.  A spouse has forced heirship rights against parents and siblings but not against children.  The réserve héréditaire cannot be disposed of by lifetime gift or by will other than to descendants and, under certain conditions, to the surviving spouse.  The réserve héréditaire depends on the number of children of the deceased, one child is entitled to half of the estate, two children two thirds equally and three or more children three quarters equally.  The remaining portion of the estate can be distributed freely by the testator.   If the deceased is a foreign national, French law governs the succession only with respect to real property in France.

In England and Wales there is complete freedom of testamentary disposition however a claim can be made if the deceased died domiciled in England and Wales under the Inheritance (Provision for Family and Dependants) Act 1975 where  the deceased objectively failed to make reasonable financial provision for the claimant dependant in all the circumstances.

 

4.4       Matrimonial Regime

 

Succession should not be considered in isolation to matrimonial property regimes. Before applying any inheritance rules to the estate of a deceased it is first necessary to determine exactly what the estate includes, this process includes consideration of the matrimonial property regime if one exists. 

 

4.4.1 What assets are available?

 

Pre and post nuptial agreements need to be considered in the case of foreign estates.  In addition legal rules, such as the Irish concept of survivorship of jointly held assets, need to be considered in the determination of what estate is available for distribution.

 

The applicable matrimonial property regime may be one of the community of property conferring inter vivos property rights on a spouse.  This may be irrespective of which spouse holds title to the property.  This limits the estate which a spouse can dispose of by will. A typical regime may provide for the property acquired by the spouses prior to the marriage, property connected with their profession or business and property received by way of gift or inheritance to be treated as separate property of the spouses.  Any property acquired during the marriage may be treated as common or community property and the spouses usually own a one half share of such community property.  In France, Luxembourg, Spain and certain states in the USA the division of property is limited to marital gains.  In South Africa and the Netherlands the entire estate of both spouses may be treated as community property, including assets acquired before the marriage.

 

Such matrimonial property regimes limit and possibly exclude the need for a spouse to be protected from the other spouse’s power of testamentary disposition.  In such cases usually any forced heirship restriction is then only in favour of descendants.

 

Where by law marriage confers no matrimonial property rights, usually a surviving spouse has testamentary rights, such as in Ireland under section 111 Succession Act 1965.

 

The balance between these distinct systems can be upset within one state if another’s law becomes applicable.  The lex successionis is determined at the date of death whereas the law relating to matrimonial property may have been determined much earlier.  Problems arise where the deceased moved from a jurisdiction having community property such as Denmark and certain States in the US, to a jurisdiction, such as Ireland, having a separate property regime, and vice versa.

 

4.4.2 Who is entitled?

 

Consideration must be given to the question of whether a state recognises cohabiting or same sex relationships.  The Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 provides civil partners with the same rights as spouses in Ireland for succession purposes. It also provides cohabitants with some rights to succession through redress.  Similarly in other jurisdictions, rights have been attributed to partners in various guises however the entitlements differ greatly between states, with some states opting to confer rights almost identical to those who are married and others providing fewer rights.  Also states apply different definitions of who can and cannot be registered as partners (e.g. Ireland will only permit registration of same sex partnerships where other states allow the registration of opposite sex partners). 

 

It is also important to establish if a foreign divorce is recognised in the country of relevance.  If the divorce is not recognised in Ireland, the spouse for the purpose of the Succession Act will continue to be the divorced spouse (as opposed to any other spouse on a subsequent ‘remarriage’) and the divorced spouse will therefore continue to have entitlements where Irish succession law applies (for Irish immoveables and if the deceased died domiciled in Ireland and the doctrine of renvoi in relation to non Irish situate assets determines that Irish succession law should apply).  This paper does not propose to outline in detail the provisions of the recognition of foreign divorces but it should be noted that with the effect of the Domicile and recognition of Foreign Divorces Act 1986, combined with the case of W v W  (Supreme Court 16 December 1992) a foreign divorce obtained, whether pre or post 2 October 1986, will be recognised by Irish law as a valid divorce decree if the divorce was obtained in the jurisdiction of domicile of either of the parties to the marriage. Under Brussels II bis (the Council regulation (EC) No 2201/2003 of 27 November 2003), with listed exceptions, any divorce obtained under these regulations after 1 March 2001 is known as a judgement which if given in a Member State (other than Denmark) is recognised in the other Member State (other than Denmark) (Article 21(1)).

 

4.5       Doctrine of Renvoi

The Doctrine of Renvoi arises where there is an international dimension to a private international matter and it is necessary to determine the applicable law.  It is the process by which a court adopts the rules of a foreign jurisdiction with respect to any conflict of laws that arises.  In some instances, the rules of the foreign state might refer the court back to the law of the forum where the case is being heard. Renvoi comes from the French ‘send back’ or ‘return unopened’ and is applied whenever a forum court is directed to consider the law of another state.  In essence where a rule of the conflicts of law refers to the law of a foreign country but the rules of that country refers it either back to the first country or on to another country, the doctrine of renvoi will apply so that the forum court will decide which country’s rule of law should apply.

The Doctrine of Renvoi is very challenging!  This is more so because some states operate a Single Renvoi system, others a Double Renvoi and others none at all! It has been aptly described as the ‘bette noire of the conflicts of law’ and has also being described as a ‘legal ping pong’ and it is not a satisfactory doctrine as it is approached on an inconsistent or ad hoc basis within jurisdictions.  Indeed there are many cases which have been criticised for not correctly applying the doctrine of renvoi (and many others where the doctrine was never referred to in the first place!)

A single renvoi forum always refers to the other jurisdiction's choice of law rules. If those rules would send the issue back to the forum court, the forum court will accept the first remission and apply its own laws. Thus, equality of outcome is always achieved so long as the competing laws operate different systems. However if both sets of laws operate with either no renvoi system or single renvoi systems, there is a potential problem.

Hence, there is another system called Double Renvoi which will also ensure parity of result so long as no other relevant law is using it. In this scenario, the forum court considers that it is sitting as the foreign court and will decide the matter as the foreign court would. In this system, there can never be more than two remissions, e.g. English forum refers to French law (a single renvoi system) so English law is applied (1st remission) and France accepts the remission (2nd and final).

4.5.1    Ireland and Renvoi

Where Irish courts have jurisdiction e.g. the deceased died domiciled in Ireland or there are Irish assets, the Irish courts will apply Irish law in determining whether Irish law or foreign law should apply.  Subject to the new Regulation mentioned at paragraph 5 below which will change the provisions after 2015 the following issues arise.

When, following the application of the Irish private international law (PIL), it is decided that a foreign law governs the matter, e.g. where the deceased died not domiciled in Ireland and the assets in Ireland are moveable, the decision is made as to whether to apply the domestic law of the foreign country and send the matter to that jurisdiction on the basis it will accept it, e.g. if the deceased died domiciled in Scotland, the Scottish court would accept the jurisdiction as it also applies succession rules that moveables are dealt with by the lex domicilii. 

Alternatively where the Irish court applies the whole of the law of the foreign country it also should apply its PIL rules too.  In such a case the foreign country’s rules of conflict of laws may refer the matter back (renvoi) to the law of Ireland.  For example where the deceased died domiciled in France but habitually resident in Ireland and held moveables, French law looks to habitual residence for moveables (and post 2015 for all) and applies the Irish law.  If so, the Irish courts must decide whether to accept the renvoi and so apply Irish law or otherwise deal with the matter.  Usually if the matter has been referred back to the Irish courts, it will accept the renvoi.

The practice to date of the Irish courts appears to be to apply whichever approach best meets the equity of the case.  While there is merit in this, it does mean considerable uncertainty for practitioners and their clients.

4.5.2    Single renvoi

Some countries accept renvoi once, e.g. Belgium, Luxembourg, Spain and Italy.

For example (up until 2015) a testator, who was a French national, was habitually resident in Ireland but domiciled in Spain, dies leaving moveable property in Spain.

The law of the forum i.e. where the property is situate (Spain) looks to the law of the deceased’s nationality, namely France and applies French law.

French law applies the law of the deceased’s habitual residence which is Irish.

Irish law looks to the domicile of the deceased which is Spain. 

As there were 2 referrals (from Spain to France and from France to Ireland) Spain will not accept it back and the Spanish court being the law of the forum will therefore apply the law where it was last left, i.e. Irish law.

4.5.3    Double renvoi

As mentioned in this scenario, the forum court considers that it is sitting as the foreign court and will decide the matter as the foreign court would. In this system, there can never be more than two remissions.

Some countries accept renvoi twice, e.g. England and France (up to 2015).

For example say a testator who was an Irish national, was habitually resident in Spain but domiciled in Italy dies leaving moveable property in France.

The law of the forum i.e. where the property is situate (France) looks to the law of the deceased’s habitual residence, namely Spain and applies Spanish law.

Spanish law applies the law of the deceased’s nationality which is Irish.

Irish law looks to the domicile of the deceased which is Italy. 

Italywill not accept a double renvoi (only single). 

However as France is the law of the forum (where the property is situate) and will accept double renvoi, it will most likely seek in France to determine and apply Italian law.

4.5.4    No renvoi

Some countries do not accept renvoi at all, e.g. some states in the USA, Denmark, Hungary, Greece and Morocco.

For example say a testator who was domiciled and habitually resident in Ireland dies leaving immoveable property in Denmark.

The law of the forum i.e. where the property is situate (Denmark) looks to the law of the deceased’s habitually residence, namely Ireland, and applies Irish law.

Irish law applies the lex situs which is Danish.

Denmarkwill not accept it back and the Danish court will therefore apply the law where it was left, i.e. Irish law.  In re Ross 1930 1 Ch 377, in re Duke of Wellington 1947 Ch 506.

 

5.      International Conventions

 

Given the huge difficulties presented above and the potential conflicts that may not even be resolved by the application of the doctrine of renvoi, there is a surprising dearth of conventions available to resolve the uncertainties that can arise in international tax planning.  Possibly this is because there is such divergence between the laws of different countries that it is hard to know where to start!

 

The Convention of 5 October 1961 on the Conflicts of Law as Relating to the Form of Testamentary Dispositions has been ratified by 28 states including Ireland.  Section 102 Succession Act 1965 as referred to at paragraph 3.3.2 above incorporates this convention and is very useful in ensuring the validity of wills cross border.

 

Other conventions such as the Hague Administration of Estates 1973 Convention, the Hague Matrimonial Property Regimes Convention 1978 the Hague Trusts Convention 1985 and the Hague Succession Convention 1989 and the UNIDROIT Convention (which introduces as form of International Will)  have not been ratified by Ireland.

 

Irelandhas signed the Hague Convention on the International Protection of Adults 2000.

 

BrusselsI – the Council regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters does not apply to areas of civil law such as wills and succession. 

 

Brussels II and Brussels II bis– the Council regulations (EC) No 1347/00 of 1 March 2001 and 2201/2003 of 27 November 2003 on jurisdiction and the recognition and enforcement of judgements in matrimonial matters and matters of parental responsibility can be relevant as regards its effect on succession.  It entered into force on 1 March 2005 in all Member States other than Denmark.

 

The most recent convention that affects succession is Brussels IV – the EU Regulation on Succession (No. 650/2012) which attempted harmonisation of succession but has fallen short in many aspects. Crucially Ireland, Denmark and the UK opted out of this regulation, yet confusingly the Regulation will have an affect on how Ireland will deal with signatory states and how signatory states will deal with Ireland. The Regulation attempts to provide that in all EU Member States (other than Ireland, Denmark and the UK):-

 

  • Habitual residence is to be the connecting factor to determine which jurisdiction would deal with wills and succession for both moveables and immoveables;
  • The Doctrine of Renvoi is abolished other than in the case of third party states;
  • That testators could designate the law of their nationality as applying to the whole of their estate;
  • That there would be a uniform European Certificate of Inheritance (i.e. grant/letters).

 

There are concerns with the definition of a third state (are Ireland, Denmark and the UK third states – they are EU member states but not signatories to the Regulation so there is confusion in the drafting). Also it remains to be seen whether the particular signatory states will interpret the term habitual residence consistently. It is also noteworthy that trusts were not dealt with at all in the Regulation, it being predominantly driven by the civil law countries.

 

The Regulation does not affect assets passing by survivorship and does not affect the tax that may arise in a member state (other than to the extent the assets pass a certain way, this might affect how the tax is calculated).

 

Interestingly is the opportunity under the Regulation for a testator to elect to apply his nationality to govern the succession of his estate and there is no requirement that the nationality be one of the signatory states. This leaves room for Irish nationals to seek to apply Irish law to foreign assets if situate in a signatory member state.

 

The Regulation will only affect deaths on or after 17 August 2015 but the opportunity to elect under a Will can be made now to cover deaths after that date.

For instance where a testator domiciled, habitually resident and a national of Ireland owns immoveable property in France.  After 2015 the law of the forum (France) will be to apply the law of the habitual residence i.e. Irish law.  Under Irish PIL the lex situs of France governs the succession of the property and so it will refer the matter back to France.  French courts should therefore apply the law of France to the property however the Regulation requires it not to accept a renvoi other than from a third state. Is Ireland a third state? Previously the renvoi would have been accepted. In re Annesley 1926 Ch 692. An election of nationality (Ireland) should remove this doubt as it is expected that the Irish courts would apply internal law to provide that the election was effective and so apply Irish law.

6.      Practical Implications to Will drafting

General practice in Ireland is to suggest to clients that they should provide for their immoveable assets through a Will made in the jurisdiction where the immoveable assets is situate and provide for their moveable assets to pass under a will made in the jurisdiction of the testator’s  domicile. 

 

However the matter is not that that simple - is such general advice correct? We already see that until 2015 Spain applies the law of the national to their immoveable property so it would seem to mean that for an Irish national, an Irish Will could easily govern Spanish property.  Is it better for the client to have an Irish Will that will deal with the Spanish position rather than dying intestate in relation to his Spanish property? Particularly if the Irish national is habitually resident under Spanish law in Ireland.

 

Given that an Irish practitioner should not advise on non Irish legislation it is indeed the best practice to follow the general practice unless and until specific foreign advice is received to the contrary and such advice is kept up to date on any reviews of the Irish Will.  Therefore in the case of the Spanish holiday home owned by the Irish person, the Irish Will should not attempt to cover the Spanish property unless the client (and the drafter of the Irish will) has received advice specifically saying it is in order for the Irish Will to apply to that property.  In this way the Irish practitioner is protected from advising on foreign property matters outside his abilities. 

 

Separately how each jurisdiction’s forced heirship works within a client’s estate can produce mismatches.  For example an English national with his habitual residence in England dies domiciled in Ireland, leaving a holiday home in Spain valued at €600,000 and €300,000 in an Irish bank account.  The remainder of his estate is owned jointly with his wife.  He leaves his estate to his only daughter.

 

The issue here for an Irish court is that Spain will determine that the Spanish property passes under English law.  England will claim no jurisdiction. Ireland would claim jurisdiction only over €300,000.  In practice an Irish court could award a legal right share to the spouse of either €100,000 (one third of the Irish bank account) or €300,000 (one third of the Irish bank account and the Spanish property).  As Spain will look to the English law, an Irish court in determining how the Spanish estate will be dealt with will have to consider how a Spanish court will determine what English law is. The issue which the daughter faces is whether she receives €200,000 out of the Irish bank account or nothing out of it. If the death occurs after 2015 and an election of English nationality was made, possibly the Irish courts would accept that election as the Spanish court would likely apply the PIL of the English court which would renvoi it back to Spain.

 

 

 

7.      Conclusion

 

Administering estates with an international dimension is clearly complicated. A practitioner should take care in advising a client in relation to any foreign matter to ensure that the client takes local advice and then assist the client in interpreting that advice in drafting a will.  However the practitioner and the client may often find that the resulting advice is unsatisfactory if, because of cross border complications, there is no clarity regarding how an asset will be dealt with.  While ultimately certainty is only found when actually administering the estate, at least the difficulties will have been highlighted in advance so that the client can take steps to either move his assets out of the relevant country or take other steps to minimise the potential problems.

 

Appendix 1- Connecting factors; Doctrine of Renvoi; Forced Heirship

 

STATE

Habitual Residence

Nationality

Domicile

 

Schismatic (S) or Unitarian (U)

 

Doctrine of Renvoi accepted

 

Mandatory Forced Heirship

 

 

Ireland

 

 

 

 

  •  

 

S

 

Y

 

Y

 

United Kingdom(England & Wales;

Northern Ireland; Scotland;

Isle of Man;

Channel Islands)

 

 

 

 

 

 

  •  

 

 

 

S

 

 

 

double

 

 

 

N

 

France

 

 

  •  

 

 

 

 

S

 

double

 

Y

 

Germany

 

 

 

 

  •  

 

 

U

 

N

 

Y

 

Spain

 

 

 

 

  •  

 

 

 

U

 

single

 

Y

 

Italy

 

 

 

 

  •  

 

 

 

U

 

single

 

Y

 

Belgium

 

 

  •  

 

 

 

 

 

S

 

single

 

Y

 

Netherlands

 

 

 

 

  •  

 

 

 

U

 

 

Y

 

Y

 

 

Portugal

 

 

 

 

  •  

 

 

 

U

 

N

 

Y

 

Denmark

 

 

  •  

 

 

 

 

 

U

 

N

 

N

 

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Aileen Keogan | Solicitor & Tax Consultant | 21 The Avenue | Louisa Valley | Leixlip | Co. Kildare | Ireland

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