How does one plan for succession of assets located in different countries?
With globalisation, Indians have acquired assets in India and other countries. One can either prepare a single multi-jurisdictional will or separate situs wills for its succession. Both are valid.
What is a separate situs Will?
It is a Will that covers the assets located in a particular legal jurisdiction (or “situs”) and is executed in accordance with that jurisdiction’s laws.
What is a multi-jurisdiction will?
It is a single Will which covers the assets in all the jurisdictions.
Why are separate situs Wills a better option than a single multi-jurisdiction Will?
- A separate will can be drafted as per the local laws so that it can be easily executed in each jurisdiction and interpreted by the Court.
- A separate will can be directly submitted to probate without waiting for it to be probated in your home jurisdiction and then probating it in second jurisdiction which is a two-step time consuming process. Problems may also arise if the original will is retained by a foreign court.
- Separate wills reduce the total probate fees. It avoids duplication of probate fees being paid in several jurisdictions on the same assets.
- Separate wills ensure greater privacy. Only those assets which are included in the separate will needs to be disclosed during the probate process as opposed to having to disclose your worldwide assets.
- Problems can occur when different interpretation for important terms is made. For example, will the term “children” under local law include or exclude step children, adopted children or illegitimate children? Does the term “spouse” refer to only legally married spouses or live-in-partner’s or same sex spouses?
- Each type of asset may have a different rule with respect to its transmission in different jurisdictions. E.g. in India if an immovable property is held jointly, the joint holder can bequeath his/her share under a Will. In some countries in case of joint ownership the asset automatically passes on to the surviving joint holder. Your local attorney would have knowledge of such issues.
- Where there are discrete assets in a jurisdiction which are intended to be left to different beneficiaries in that jurisdiction, it will be better to deal with those assets in a separate will.
- Many countries have a forced heirship laws and community property rules which does not allow complete testamentary freedom. In India the Muslim personal laws and the state of Goa has certain restrictions. Such local laws shall be considered while preparing a Will.
What are the cautions to be exercised while executing separate Wills?
- Revocation clauses – The separate Wills shall clearly contain clauses so as not to revoke a will pertaining to another jurisdiction and vice-versa. Both the Wills shall mention that the two Wills are concurrent to each other so that the Will which is executed later does not revoke the earlier Will.
- Residuary clause – The separate wills may omit certain assets within a particular jurisdiction. Residuary clauses need to be carefully drafted to avoid conflict.
- Liquid assets in a jurisdiction may be insufficient to discharge the taxes and liabilities of that jurisdiction. The allocation of tax liabilities and which estate bears the burden would be a key issue
- Each will should clearly specify the governing laws applicable to the properties covered under a Will.
Namita Agarwal, a Lawyer and Company Secretary has advised multiple NRI families for succession planning. She can be reached at email@example.com