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Wills and Overseas Property
By Janet Cribb
In the last 20 years many people have turned to property as a long-term investment. Those of us who travel, or live away from home, are exposed much more to the concept of buying property which is not their principal private residence. It is quite usual to find that your friends and neighbours are buying either their dream home or a ‘buy to let’ investment property while their earnings will support a mortgage. It is one of the acceptable faces of gearing.
Now, what happens if you suddenly disappear from the scene never to return? Any ‘immovable’ property (so boats are not included in this!) must be dealt with through the probate system of the country where it is,(known in legal jargon as the ‘lex situs’, which means the law of the land in which the immovable property is situated). The term ‘immovable’ in this context means exactly what you would expect, assets that are stuck to the ground – such as houses, flats, blocks of land, anything to which you have a title.
If you have bought your flat or house in Hong Kong, then Hong Kong probate rules apply. Hong Kong expects to supervise the change of ownership, either to the beneficiaries or to the Trustees of the trust fund set up in your Will. Likewise, if you also buy a house in Australia, a Will must go through the probate system there. If you only have one Will then delays may occur. The same Will has to be probated twice in some states, and therefore it takes longer for the estate to be wound up.
A grant of probate can be re-sealed in some countries. The UK will accept a grant of probate issued in its old colonies, since the legal system was set up as Common Law and is therefore considered sound. At least, there are no major discrepancies as there would be for example with Spain or France, in both of which the legal system is Civil Code.
To put it at its most basic, Common Law is a system that is ‘for the people’. It is a judicial system that involves a jury as well as a judge and allows the individual to leave his assets to whom he chooses (given certain restrictions for supporting dependants). Civil Code follows the legal system of ancient Rome, which was Patriarchal, follows the blood-line for inheritance matters and imposes the wishes of the State on its citizens. As far as passing on of property is concerned, it may dictate who has what in a family if someone dies (known as forced heirship). Many European countries are Civil Code, and so of course are the colonies of France and Spain and Portugal.
Many of the little Islands in the Pacific (British Virgin Islands, Cayman Islands, etc) are Common Law. So basically are most of the States in the US, but 3 in the South were originally French property and retained their original legal system after the Louisiana Purchase when they were sold to the British, and of course in Canada Quebec is still very much Civil Code!
You can see from all this that to have one Will and property overseas, especially if it is a Civil Code country, is asking for trouble.
It is perfectly possible to have more than one Will. Each Will outside your country of domicile must be limited to 1) assets in that country and 2) the type of property it is intended to cover (for example, immovable assets and bank account). The drafting of such Wills needs to be done very carefully. At all costs one Will must not accidentally revoke another. In the long run the cost of complications and subsequent lawyer’s fees in sorting out the mess far outweighs the cost of having Wills prepared as ‘sets’ of documents where the legal system s are the same.. There is less likelihood of serious errors creeping in if the whole process is done either by one person or supervised in some way, and then approved locally. Many home-based small law firms are unfamiliar with this situation and will not deal with the overseas assets of a client, preferring to handle only that with which they are familiar and hand over the rest to local lawyers, or advise to use a law firm with international offices (which would be very expensive).
If you are investing in property, do give this some thought. If you have a family that includes children under 18, then the delays could cause serious inconvenience for your spouse, and even worse for children left in the care of Guardians if both parents die.
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Janet Cribb
Channel: Wills & Living Trusts |
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