The introduction of International Wills in Australia and the persistent challenge of international estate planning
Published on August 31, 2016
A will can be one of the most complex and difficult documents to be written for you, especially where your assets or your beneficiaries are located across several countries.
On 10 March 2015, the Australian Government acceded to the Convention Providing a Uniform Law on the Form of an International Will 1973. The Convention seeks to harmonise and simplify the formalities for wills that have international characteristics. It does this by establishing a uniform law introducing a new form of will known as an International Will.
The provisions of the Convention were introduced in Australia by the passing of amendments to the Succession Act 2006 (NSW) and equivalent legislation in all other Australian jurisdictions. The amendments allow for:
i. the making of International Wills in Australia; and
ii. the acceptance of International Wills made outside of Australia into Australia for the administration of Estate assets located in Australia.
Under the Convention, to be a valid International Will, a Will must:
i. be made in writing, although it need not be written by the testator in his/her own hand and it can be written in any language; and
ii. be signed and dated by the testator in the presence of two witnesses.
In addition, a certificate must be attached to the end of the International Will, signed by an authorised person, attesting that the requirements and procedures for drafting and execution of an International Will have been satisfied.
Benefits of International Wills
The key benefit of International Wills is that they provide testators with clarity when dealing with their worldwide assets as only one Will is required.
Limitations of International Wills
In deciding whether an International Will is appropriate, it is important for a testator to understand their limitations:
i. International Wills are accepted only in countries where legislation supporting the Convention is in force. These countries are Australia, Belgium, Bosnia-Herzegovina, Croatia, Cyprus, Ecuador, France, Italy, Libya, Niger, Portugal and Slovenia and some US States (Due to the federal nature of the United States, individual states also had to enact the Convention – 23 states and the District of Columbia have done so).
ii. International Wills do not avoid potential competitions between countries. In determining which succession law applies, courts in different countries will consider different factors such as the testator’s nationality, the law of domicile (where the testator lived or intended to live), or the testator’s country of residence. This may often result in unwanted consequences.
Why we don’t recommend an International Will
There are situations where an International Will simply may not be an option for the testator. This is particularly the case where legislation supporting the Convention is not in force in the required countries. In these situations, the testator may prepare a Will in each country.
The benefits of having a Will in each country (even if the testator can have an International Will) include:
i. Quicker administration of the Estate: Where there are two separate wills, for example one dealing with assets in Australia and the other where the assets are located overseas, the respective Executors may obtain a grant of Probate in each jurisdiction independently of the other. That is, they may apply for a grant of administration in both countries at the same time which will reduce the delay in administration of the estate.
If a testator only has one will for all their property which is located in multiple countries, the respective Executors may have to obtain the grant of Probate in one jurisdiction and then apply for another grant in the other.
ii. Legal compliance: Each will may be prepared in the language and according to the formal requirements of the country in which the assets are located. This should reduce the need for supplementary evidence and documents translating the contents of the Will in support of a grant of Probate of the estate.
iii. Tax minimisation: If a testator has executed a local will that has incorporated various financial structures (such as trusts or instructions in respect of the timing of gifting assets) in accordance with local tax and succession law, he/she by careful estate planning applicable to a particular jurisdiction may minimise the estate’s tax liability (if any). This can ensure the government having jurisdiction over a distribution does not receive an unnecessary financial windfall and/or that the beneficiaries do not shoulder a burdensome tax liability.
As we live in an increasingly global society and smaller world, issues surrounding international estate planning are becoming more prevalent. Although International Wills provide a step towards international consistency, many estate planning challenges aren’t so easily overcome.
If you hold assets in multiple jurisdictions, it is important to seek legal and taxation advice to ensure compliant and appropriate succession of your estate assets.