IMPERFECT WILLS AND TRUSTS. STEP CARIBBEAN CONFERENCE May 12 14, 2014

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1 IMPERFECT WILLS AND TRUSTS STEP CARIBBEAN CONFERENCE May 12 14, 2014 Atlantis Paradise Island, Bahamas Presentation by Paul Webster, Q.C.

2 My colleague has outlined the general requirements for a valid will and some of the many pitfalls that can arise when care is not taken in preparing and executing a will or trust. This presentation will focus on the more specialised area of wills and trusts involving cross border elements. It is given from the perspective of the laws of the British Virgin Islands.

3 The simplest case is where a BVI domiciliary is dealing with assets in BVI. No foreign element is involved and the estate is governed entirely by BVI law. Different considerations where: The testator has foreign assets He is domiciled in another jurisdiction and has assets legally situated in BVI. In both situations the drafting exercise will have to take into account. Essential validity Formal validity Sandy Cay, B.V.I..

4 Essential validity. Two situations: Movable property governed by law of testator s domicile Immovable property governed by the law of the situs of the property. The distinction is important when drafting a will or trust. Example: Shares in a BVI company are legally situated in the BVI, as moveable property, succession to the shares is governed by law of the testator s domicile, which may be different from the position in the BVI. A gift of those shares, although situated in the BVI, will have to comply with the laws of the Testator s domicile. If those laws have, for example, forced heirship rules, those rules will override any gift that is inconsistent with them. Anegada, B.V.I.

5 Formal Validity Again this depends on the property being disposed of Where common law applies Movables must comply with the rules of the Testator s domicile. Immovables must comply with the lex situs. Spring Bay, Virgin Gorda

6 Capacity The same general rule applies lex domicilii applies to movable property and lex situs to immovable property. Capacity is determined as at the time of making the will.

7 Situs of Assets Movable property is situated wherever the Testator is domiciled. Immovable wherever the property is located. S. 245 of the Business Companies Act says that shares in a BVI company are located in the BVI. But the succession to those shares is still determined by the law of the Testator s domicile. This was confirmed in recent decision of Ellis, J. in Re Liao Yo Chang, deceased. The Judge correctly applied BVI law to the issue of the right to administer LYC s estate, and the law of the deceased s domicile (Taiwanese law) to the issue of succession to the shares. The Baths, Virgin Gorda

8 Drafting The draftsman must ensure that gifts with foreign elements are disposed of in a manner that complies with the relevant laws and the donor s intentions. Generally, a separate grant of probate or administration is necessary for each country in which property, movable or immovable, is located. The practice has developed of having separate wills for each jurisdiction to give some degree of confidentiality and allow for speedier and more efficient issuing of grants. The Caves, Norman Island, BVI Marina Cay, B.V.I.

9 Disputes The Pagarani Case on the requirements for a gift of shares and the effect of a declaration of trust. The use of the declaration of trust to complete a gift was applied in Shah v Shah (2010) and Pennington v Waite (2002). The Re Liao Yo Chang case and the choice of administrator. Jost Van Dyke, B.V.I.

10 Conclusion This presentation highlights the need for care and attention in preparing wills and trusts dealing with the disposition of assets in different jurisdictions. The guiding principle in drafting wills and trusts involving foreign elements is to take advice from lawyers who are in the jurisdiction of the governing law of each gift, and follow that advice. Cooper Island, B.V.I.