Writing a will is a vital aspect of succession planning and management of inheritance, and the need for such a document takes on an added dimension with cross-border assets, argues Paul Davies partner at Lane-Smith & Shindler.

The Institute for Public Policy Research believes that up to 5.5 million UK nationals are living abroad, nearly 1 in 10 of the population. Yet, up to 70 per cent of UK citizens die intestate, according to The Society of Will Writers. Add to that the complexities of estate planning across jurisdictions and you have a recipe for emotional and financial turmoil says Paul Davies, partner at estate planning specialists Lane-Smith & Shindler.

My aim is wealth preservation - enabling clients to leave their beneficiaries the most favourable legacy possible. I do not want to see assets fought over unnecessarily by legal professionals in multiple jurisdictions. Yet, so few of us adequately plan ahead to ensure our assets are disposed of as favourably as possible for our beneficiaries.

Let’s take the recent case of the late Malcolm McLaren to illustrate how messy it can get.

McLaren, the famous pop Svengali, passed away in April. He did make a will in Switzerland in the final days of his terminal illnesses, leaving his entire estate to his partner of 12 years.  

McLaren, a UK citizen, had the bulk of his assets, believed to be worth over £1 million (around $1.59 million) in total, in the UK, the US and France.

His son is now contesting the will on grounds of legal jurisdiction, as well as mental state, and for failure to make "reasonable financial provision" for him under the Inheritance (Provision for Family and Dependants) Act 1975.

The case is a good vehicle for highlighting a number of issues (including discrepancies) between wills and estate planning in different countries that you should consider carefully if you live in a foreign jurisdiction.

Make a will
Before explaining the issues raised by the McLaren case, it cannot be stressed enough as to the importance of having a will. So be sure (if you haven’t) that you address this issue and have an up-to-date will.  If you did it some time ago, revisit it.  If you are concerned or unsure of how the following issues affect it, review it.

A question of validity – making a will in a foreign jurisdiction
The 1961 Hague Convention, to which most major countries are signed-up, states a will written in one country is recognised in another if the countries are both signatories to the Convention.

But writing a will in one country, such as Switzerland, where you have assets or are resident, will not necessarily avoid the application of UK law if you are domiciled in the UK or have assets there. In the McLaren case, there is an additional complication - the ‘will’ was what is referred to in Switzerland as an "inheritance contract" so there is doubt over whether it will be recognised in the UK.

Challenging a will in a foreign jurisdiction
Under UK law a will can be challenged if it is argued that there was a mental issue at the time the will was written or amended, or if the will has not made adequate provision for dependants.

In the McLaren case a will was made, but he was in the later stages of a terminal illness. By not planning for his passing until the last moment, the will is more open to being challenged.

Under the Inheritance (Provision for Family and Dependants) Act 1975, a spouse and children have a right to reasonable provision. This is considered to be more applicable to children under the age of 18, but it is not restricted by law to minors.

Legal battles between the older children of a first marriage and the spouse or partner and children of subsequent marriages can occur (as illustrated here). An additional element of uncertainty is that what is deemed to be "reasonable provision" is entirely up to the courts of law.

My will and inheritance tax
There is an interesting distinction between UK and many Continental jurisdictions, which is touched upon in the McLaren case. Specifically, in jurisdictions such as France, succession to assets can be weighted heavily in favour of family members by virtue of what are called “forced heirship” provisions.
 
If you have property in a civil law jurisdiction such as France or Spain then you could find yourself subject to forced heirship laws on that property. France in particular has some of the most stringent forced heirship laws.

These rules give strict priority to the children of present and past marriages, regardless of what is contained in a UK will, as this does not override the rules of forced heirship.

Conclusion
McLaren, I am sure unintentionally, is responsible for a situation where his inheritance is threatened with being eaten up by legal proceedings at the expense of his intended beneficiary.

The following steps would have helped avoid such a situation. Firstly, plan and write your will – with professional help if your affairs are complicated as McLaren’s were. Should serious illness prompt the writing of a will, make sure a doctor can verify your good mental state of mind in writing. Better yet, make a will before serious illness threatens.

For those living abroad or with assets in various jurisdictions, consider having more than one will so dealing with each jurisdiction separately. Take local legal advice where necessary. Ensure the separate wills are complementary and that your "main" will is compatible with the law of the country that will govern succession to your estate generally.

I use the case of McLaren as it shows that leaving things to the last minute can have potentially disastrous results. I wonder how many of our estimated 5.5 million expats, many without wills, are leaving their beneficiaries in a similar predicament.

Paul Davies can be contacted on  0845 658 48 48 or by e-mail paul@lanesmithshindler.com