If preparing a will where a client has assets immovable assets in Estonia and assets in the UK. I repeatedly read that one needs to obtain legal advice in the foreign jurisdiction. What is the purpose of doing that if a client is able to make a valid election for English and Welsh law to apply to their estate, and given that we can ensure the formal validity of the will through compliance with the Hague Convention?
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Because whatever the will says Estonia may impose its own law of succession on the devolution of local immoveables and thus what the PRs can or need to do with such assets. The private international law of England and Wales is resolute that devolution to immovable property situate in that jurisdiction is governed by the lex situs i.e. the law of E&W AND that the lex situs governs immovables of a n Engish or Welsh domiciliary which is situate abroad. Lord Nelson in 1846 was unable to convince the English Court that his Sicilian estate could be dealt with otherwise than by the law of Sicily, not then part of Italy.
The lex situs may employ renvoi to English law or be the law of a country within Brussels IV, which applies to all EU Member states save Denmark and Ireland. The UK is not and never was a signatory.
There is no substitute for ascertaining what the lex situs says and presuming it is the same as the law of domicile would be negligent.
Jack Harper
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Thanks Jack, the point I am getting at though is, if we know a foreign jurisdiction applies Brussels IV, and the testator is entitled to validly elect for English law to apply to succession, then why one would need legal advice in respect of the foreign jurisdiction.
Have I lost the will to live? If “we know” then why seek local legal advice? If we do not seek local legal advice how do “we know”? If you always “know”, Leagle Beagle, why do you keep asking questions on this Forum?. A person so intimately knowledgeable about substantive Estonian law including its PIL, as you clearly are, really does not need to ask about it from us on here, who probably have the the humility to accept we know absolutely nothing about Estonian Law but are content to ask someone who does.
Jack Harper
jack:
e law of a country within Brussels IV, which applies to all EU Member states save Denmark and Ireland. The UK is not and never was a signatory.
Thanks Jack, the point I am getting at though is, if we know a foreign jurisdiction applies Brussels IV, and the testator is entitled to validly elect for English law to apply to succession, then why one would need legal advice in respect of the foreign jurisdiction.
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Previous Replies
Because whatever the will says Estonia may impose its own law of succession on the devolution of local immoveables and thus what the PRs can or need to do with such assets. The private international law of England and Wales is resolute that devolution to immovable property situate in that jurisdiction is governed by the lex situs i.e. the law of E&W AND that the lex situs governs immovables of a n Engish or Welsh domiciliary which is situate abroad. Lord Nelson in 1846 was unable to convince the English Court that his Sicilian estate could be dealt with otherwise than by the law of Sicily, not then part of Italy.
The lex situs may employ renvoi to English law or be the law of a country within Brussels IV, which applies to all EU Member states save Denmark and Ireland. The UK is not and never was a signatory.
There is no substitute for ascertaining what the lex situs says and presuming it is the same as the law of domicile would be negligent.
Jack Harper
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Hear hear Jack!
Cliona O’Tuama
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Although we know what Brussels IV countries should do, it is not in fact what they always do do. Advisers continue to interpret the legislation differently.
There might also be significant administrative complications associated with a choice of law.
Clients should be made aware of the risks, and advised to take local advice to cover those risks.
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If a Will, or a lifetime transfer, is to relate to immoveable property located abroad and contains a trust it is important to realise that the lex situs may not recognise trusts and the local state may not be a signatory to Hague on Trusts and on their Recognition. Only 14 states are. The consequences that follow could be entirely unwanted and indicate a change of plan or workround. One such could be the local tax consequences.
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Thanks, Chris. That makes a lot of sense. When you say administrative complexities, what did you have in mind?
Can the Estonian Land Registry cope with PRs being registered rather than the beneficiaries themselves? Might Estonian tax law see the appointment of PRs as a gift to those PRs, rather than to the beneficiaries, and so tax them at a different rate? Might any passing on of the property by PRs then be seen as a separate and additional transfer, and so taxed as such?
Might the choice of law require obtaining specialist advice in order to progress the administration of the succession, at potentially a greater cost than simply doing an Estonian Will?
Those might be some issues that arise, off the top of my head.
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If the PRS or any will trustees are treated as owning as individuals, though it may not deflect/alter the Estonian tax as Christopher points out, it may be better for the Will trust to be secret or half secret. As it has to exist before the Will is executed in English law one would not wish to go through the rigmarole of that if it did not affect devolution/administration in Estonian law i.e. if the gift would merely be treated as absolute and the trust limitations simply ignored.
There can be tax mismatches to take into account as there is between the transfer concept of IHT and the acquisition basis of Ireland. There are only 6 IHT double tax treaties and four estate duty which still have limited effect (and India is surprising in its operation given that there is no local tax on death). At least the actual tax treatment abroad must be ascertained.
I do not wish to seem belittling or condescending but these questions are very rudimentary in a field where specialist experience is truly desirable. This forum is not only for the particular questioner but for the interest of others some of whom will be glad to learn from others’ experience.
I took part in hundreds of these mob-handed advisory fandangos with foreign lawyers in, often several, foreign jurisdictions, either co-ordinating the exercise from the UK or supplying the UK input. They do tend to follow a basic pattern and give rise to familiar strategies. Where one is concerned with low value assets or less complex issues e.g. a single foreign property fancy outcomes are not in order.
Unfortunately to avoid basic pitfalls or missed opportunities and ensure that the UK PRs can gather in the foreign asset in the optimum way invariably local advice is needed. If an adviser does not bother taking it, and something goes wrong as a result, the adviser may be blamed even by the PI insurers let alone the clients. Not least, if a client is not domiciled in E&W, or any jurisdiction in which the adviser is competent to practice, even Scotland or The Six Counties/Northern Ireland, an incipient question is whether they should be taking the lead in the estate planning. It is certainly not safe to apply our concept of domicile as being the appropriate nexus of the individual to the foreign country. It may be quite different, like residence, nationality or citizenship, our own legal concepts of which are not straightforward.
Jack Harper
Can the Estonian Land Registry cope with PRs being registered rather than the beneficiaries themselves? Might Estonian tax law see the appointment of PRs as a gift to those PRs, rather than to the beneficiaries, and so tax them at a different rate? Might any passing on of the property by PRs then be seen as a separate and additional transfer, and so taxed as such?
Might the choice of law require obtaining specialist advice in order to progress the administration of the succession, at potentially a greater cost than simply doing an Estonian Will?
Those might be some issues that arise, off the top of my head.
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Previous Replies
Thanks, Chris. That makes a lot of sense. When you say administrative complexities, what did you have in mind?
If a Will, or a lifetime transfer, is to relate to immoveable property located abroad and contains a trust it is important to realise that the lex situs may not recognise trusts and the local state may not be a signatory to Hague on Trusts and on their Recognition. Only 14 states are. The consequences that follow could be entirely unwanted and indicate a change of plan or workround. One such could be the local tax consequences.
Although we know what Brussels IV countries should do, it is not in fact what they always do do. Advisers continue to interpret the legislation differently.
There might also be significant administrative complications associated with a choice of law.
Clients should be made aware of the risks, and advised to take local advice to cover those risks.
Hear hear Jack!
Cliona O’Tuama
Have I lost the will to live? If “we know” then why seek local legal advice? If we do not seek local legal advice how do “we know”? If you always “know”, Leagle Beagle, why do you keep asking questions on this Forum?. A person so intimately knowledgeable about substantive Estonian law including its PIL, as you clearly are, really does not need to ask about it from us on here, who probably have the the humility to accept we know absolutely nothing about Estonian Law but are content to ask someone who does.
Jack Harper
e law of a country within Brussels IV, which applies to all EU Member states save Denmark and Ireland. The UK is not and never was a signatory.
Thanks Jack, the point I am getting at though is, if we know a foreign jurisdiction applies Brussels IV, and the testator is entitled to validly elect for English law to apply to succession, then why one would need legal advice in respect of the foreign jurisdiction.
–
Previous Replies
Because whatever the will says Estonia may impose its own law of succession on the devolution of local immoveables and thus what the PRs can or need to do with such assets. The private international law of England and Wales is resolute that devolution to immovable property situate in that jurisdiction is governed by the lex situs i.e. the law of E&W AND that the lex situs governs immovables of a n Engish or Welsh domiciliary which is situate abroad. Lord Nelson in 1846 was unable to convince the English Court that his Sicilian estate could be dealt with otherwise than by the law of Sicily, not then part of Italy.
The lex situs may employ renvoi to English law or be the law of a country within Brussels IV, which applies to all EU Member states save Denmark and Ireland. The UK is not and never was a signatory.
There is no substitute for ascertaining what the lex situs says and presuming it is the same as the law of domicile would be negligent.
Jack Harper
1 Like