As is sadly all too frequent, wills can trigger family disputes on the death of the testator.
An extreme example of this is the Miramar murders which took place in Tapei in 2016; an alleged double murder and suicide resulted in the death of three brothers, all members of a prominent Taipei family. The late Tycoon Huang Jung-tu, the brother’s father, had amassed a colossal business empire estimated to be worth US$3 billion, which included the famous hotel and retail chain empire, known as the Miramar Group. The shootings occurred in November 2016 at a corporate meeting in the headquarters of part of this empire, the Mayfull Food Corp, one of Taiwan’s major meat importers and distributors. At the meeting, chaos ensued following the discussion about how to split the inheritance of the business left by their father; the younger brother reportedly took out a pistol and shot two of his brothers before he committed suicide with a single shot to his head.
A further complication was the family dynamic; the late father had been married twice with seven sons, and had a further two sons from another relationship, creating a myriad of obstacles!
How to avoid disputes in inheritance
Talks about inheritance need not end in murder! Many do, however, end in disputes because no will or succession plan has been put in place. The current pandemic has encouraged more people to address their wills. There are still, unfortunately, an overwhelming majority of individuals whose wills are not up-to-date and therefore do not reflect their current intentions.
For individuals with assets placed in other countries it is even more crucial to have a will, or to have more than one will.
Should individuals invest in one or more wills?
Depending on the circumstance, it can be appropriate to have one will covering worldwide assets. In others, it is advisable to have more than one will – an “international” or “offshore” will or wills.
A substantial benefit of having an offshore will is that, rather than being required to wait for a will to be submitted in the home jurisdiction before the offshore assets can be administered, the offshore will can be submitted simultaneously to that of the home will. The estate should be finalised quicker, and at a reduced cost. In Jersey, for example, the person entitled to administer the estate is required to make a personal appearance at the jurisdiction’s Court to swear the oath. If they are unable or unwilling to fly to Jersey, a local agent will need to be appointed in order to attend the Court on their behalf. It is, on the other hand, a far more time- and cost-effective way of handling a Jersey estate if there is a Jersey will that appoints a local executor, for example a Jersey lawyer.
Furthermore, some jurisdictions have marital regimes which impact inheritance. This is the case in Italy and can mean, firstly, that assets in the sole name of one spouse are, effectively, owned jointly by both spouses and, additionally, that those assets might not be free to dispose of by will.
It can also be the case that an offshore will has been drafted in accordance with offshore estate planning advice. The will can therefore utilise any available tax planning opportunities, or reduce or avoid offshore probate fees.
Another benefit is that where the offshore asset is a property, an offshore will can minimise difficulties in relation to the succession to the property. From a practical standpoint, the offshore will can be drafted in the local language, use local terminology and nuances, and so avoid any potential problems of drafting a will which does not work. English wills, for example, often include trusts which are, usually, not recognised in civil law jurisdictions such as France and Spain. Furthermore, some jurisdictions have forced heirship rules; this means that assets in that jurisdiction can only pass in a prescribed manner. On some occasions an offshore will can override such rules, but the home will can compensate for this by seeking to balance out the distribution of the estate overall.
Other advantages are demonstrated by South African wills; these include a clause specifying how much can be charged to administer the estate, as a percentage. This is a binding agreement and can be negotiated to reduce the cost. There can be exchange control concerns where, typically, the individual does not want offshore assets going to South Africa as part of the administration of the estate because there are restrictions on how much can be taken out of South Africa. It should be noted that the South African exchange control rules are changing, and it is best to always seek local advice.
Risks associated with offshore wills
While there are certain disadvantages associated with offshore wills, such as the risks of accidental revocation and partial intestacy, these can be reduced by careful drafting and good advice. Likewise, although it may cost more money to have more than one will initially, the additional costs are offset by the money that the estate saves as the result of having a more streamlined estate administration.
Jonathan Colclough, Fisa member and Partner, BDB Pitmans, UK.