Key Takeaways
- International probate litigation occurs when there are disputes involving assets in multiple international jurisdictions.
- Common issues that lead to international probate disputes include questions of jurisdiction, family inheritance disputes, differing probate laws, and conflicting laws on recognizing the validity of foreign wills or other estate planning documents.
- To resolve cross-border estate disputes, consult an attorney in each jurisdiction to navigate litigation or an alternative dispute resolution method like mediation.
- The best prevention for international probate disputes is comprehensive estate planning that involves consulting with financial, legal, and tax advisors in each jurisdiction where assets are located.
Introduction
High-net-worth individuals with complex estates and a significant number of assets and heirs in multiple countries are often subject to added confusion or difficulty in the process. This complexity may lead to the risk of disputes and litigation, such as inheritance disputes amongst heirs across borders or disputes with jurisdictions that have different laws.
International probate is an already complicated process for an executor to handle, as they are required to manage estate administration while considering various jurisdictions’ laws and requirements. Legal disputes can make this process even more difficult to navigate. Fortunately, a skilled attorney with experience in high-value estates with assets across multiple jurisdictions can help ensure proper distribution of an estate by guiding you through the process.
Understanding some of the unique challenges of international probate litigation and the estate administration process in general can give you valuable insight into what you might expect as an interested party in a complex, high-value estate.
Understanding International Probate Litigation
International probate litigation is the legal process of resolving disputes regarding the administration of estates that span multiple countries. High-net-worth individuals often have complex portfolios of assets across various locations and legal jurisdictions, as well as family members living in different countries.
A larger number of assets, which may include offshore bank accounts, international real estate, yachts located in overseas jurisdictions, international investments and more, can all complicate probate and lead to the risk of disputes. Disputes can arise between beneficiaries in different jurisdictions who each believe they have a right to inherit these assets or between the estate and the jurisdiction where assets are located, if international law conflicts with the decedent’s wishes.
However, not only high-net-worth individuals run into international probates. For example, especially in America (with its significant immigration population), any person with family members who live abroad may find themselves facing an international probate when that family member dies abroad.
Common issues that can lead to international probate litigation include:
- Jurisdiction – Questions over which jurisdiction has authority over probate assets and where you should file probate can lead to disputes around how to properly manage and distribute assets.
- Conflicting Wills – If multiple wills exist, it can create confusion regarding how to properly distribute assets.
- Differing Probate Laws – Differing probate laws across different jurisdictions may have conflicting implications for which beneficiaries should receive assets.
- Recognition of Foreign Wills – If a will is not recognized across different countries, it can lead to ambiguity or disputes around who should inherit assets.
- Inheritance Disputes – Disputes can arise between heirs surrounding which beneficiaries should receive which assets, especially if different jurisdictions have different laws governing the line of succession.
- Breach of Fiduciary Duty – If the estate executor fails to uphold their legal responsibilities in managing an international estate, then beneficiaries may raise a lawsuit claiming that the executor breached their fiduciary duty.
With complex asset portfolios spread out across a significant number of jurisdictions with different rules and regulations, the potential for issues facing high-net-worth individuals’ estates only becomes greater. These are sensitive and complex issues, so it’s always wise to consult a skilled attorney in any jurisdiction where you have assets.
Legal Considerations for Handling Assets Across International Jurisdictions
Interested parties, as well as the executor of an estate with international assets, should consider all the following legal factors facing their estates.
Jurisdictional Requirements
When assets exist in multiple jurisdictions, executors may need to file probate in each jurisdiction where probate is filed. Often called an ancillary probate, this process allows for the transfer of ownership of assets in jurisdictions beyond where the decedent lived.
Although the primary probate proceeding will take place in the decedent’s place of primary residence at the time of their death, these ancillary probate processes will be necessary wherever other assets exist elsewhere so that ownership can be properly transferred.
Recognition of Foreign Wills
A will may not be recognized in multiple countries, so it’s important not to assume that your estate plan will be recognized even if you do have one. You should ensure that any established will has been validated in the jurisdiction where the assets are located and aligns with their laws.
United States
Foreign wills are recognized in the United States, but the will must be recognized under the jurisdiction where probate is taking place. The probate court will often require a copy of the foreign will, a certified translation of the foreign will, if needed, and an affidavit from a qualified translator, if applicable.
California
In California, an international will is considered valid as long as it complies with the Uniform International Wills Act and California law. Under California Probate Code §6113, California requires that an out-of-state foreign will aligns with the following:
- California’s existing laws
- The laws of the estate or country where the decedent resided or was a citizen or national
- The laws of the state or country where the will was executed
You should speak with an experienced probate administration attorney in California to understand whether your will meets the requirements to be recognized or if it can be disputed.
Texas
Texas also recognizes foreign wills under select circumstances for any property that is located in Texas, even if the decedent was not a Texas resident at the time of death. To be considered valid in Texas, a foreign will must:
- Affect property in Texas
- Coincide with proof that the will has been probated or established in another country or jurisdiction
If these criteria are met, then the will may be used to apply for and guide ancillary probate. Again, it’s important to consult an estate administration attorney in Texas to understand your options and how to proceed.
Other Countries
In other countries, a will created in the United States or across borders may not be recognized, especially in countries with forced heirship laws. In these cases, the country will distribute assets to beneficiaries based on who is legally entitled to the property following the legal line of succession.
Ultimately, it’s crucial to research the requirements for each jurisdiction, as not all countries accept foreign wills. It’s crucial to ensure that your estate plan accounts for the laws in each country where you hold assets and that you and your beneficiaries understand the potential implications.
Tax Liabilities
Tax requirements in multiple jurisdictions overseas can complicate tax obligations for an estate. With a high-value estate, taxes can take a considerable percentage of the overall value of the assets and the distributions available to beneficiaries without proper planning.
The executor of an estate must consider all of the following:
- Assess Estate Taxes – Ensure you research and understand the taxes that are required in each jurisdiction and when you are liable for paying these taxes.
- Consider Income and Inheritance Taxes – Beneficiaries in line to receive assets may be subject to paying income or inheritance taxes on distributions, depending on the laws of each country where beneficiaries may be located.
- Research Double Taxation Agreements – The United States has tax treaties with multiple foreign countries that may be able to help you reduce tax obligations or receive exemptions.
It’s crucial that you know which taxes may apply to your estate and under what circumstances. Always consult a skilled tax advisor in each country where your estate is managing assets, both during the estate planning and estate administration processes.
Key Challenges in International Probate Litigation
International probate may include some of the following challenges.
Jurisdictional Issues
If multiple countries are involved in the probate process, it can call into question which country’s laws should apply to the administration of the estate. Even more so, if these courts have different laws around how assets should be handled, it can lead to conflict surrounding what process to follow.
For example, if the decedent owned a yacht that was purchased in Greece, but then was interested in transferring it to the decedent’s home location in California, this could lead to confusion over which country should oversee the administration of the asset. In this case, the property was still owned and registered in Greece, the administration as related to the yacht should follow Greece’s inheritance laws for distribution.
Divergence in Probate Laws
The laws for handling probate or the distribution of assets differ by country, which can complicate how to build an estate plan or distribute assets following the head of the estate’s death. For example, the most common delineation exists between common law jurisdictions and civil law jurisdictions—each has different approaches to the distribution of assets to heirs:
- Common Law – Common law countries like the United States and the United Kingdom follow a probate process to distribute assets to beneficiaries and are more likely to recognize a will that allows a decedent to identify beneficiaries based on their wishes.
- Civil Law – In civil law countries, like Spain, China, and Brazil, there is a separate legal process for heirs to claim their inheritance, often operating under “forced heirship” rules that preserve an estate for family members like children and spouses, regardless of what a will says.
If you have assets spread out across multiple countries, each with its own laws, it can be confusing for estate personal representatives and beneficiaries alike. Consulting an attorney in each country is the best step for understanding how assets will be handled.
Handling Foreign Assets and Complex Asset Structures
Identifying, accounting for, and managing foreign assets and complex asset structures is one of the biggest challenges in high-value estate litigation. Failing to account for these assets can lead to an incomplete inventory, complicating the process even further.
A significant number of international assets, like real estate, offshore bank accounts, multinational business holdings, and even artwork, can offer unique challenges in estate administration. Managing these assets entails significant administrative costs and may necessitate specialized handling during probate. Collecting proof of ownership documents, accurately valuing these assets, and navigating local tax laws can all provide significant challenges for an executor.
Cultural and Family Dynamics in Cross-Border Disputes
Differing cultural dynamics and familial complexities across borders may also influence international probate disputes. Families may have different expectations of what they should receive from the decedent based on their cultural experience.
For example, family members in a civil law country like France or China may expect to receive assets through forced heirship laws, while family members in common law countries are more likely to respect a crafted will. It’s important to have an attorney and advisors who are sensitive to these issues and can work to communicate and mediate across cultural differences.
Navigating Cross-Border Estate Disputes
When navigating estate disputes, it’s important to engage as many resources as possible and use any available estate plans to guide your steps. If a dispute arises and you are facing international probate or litigation, you should consider the following steps:
- Ensure all assets are documented and accounted for in the estate inventory.
- Compile all documentation of estate plans to gather a clear and comprehensive understanding of the decedent’s wishes.
- Involve trust and estate litigation attorneys from each jurisdiction to address each aspect of the estate and where assets are located.
- Engage financial and tax professionals to understand the requirements for each jurisdiction.
In any case, the best step you can take is to minimize risks in your estate planning by having a robust and detailed plan. This estate plan may include a single tool or a combination of tools like offshore trusts, international wills, power of attorney and more. Then, it’s crucial that you maintain clear communication with all beneficiaries and interested parties so that they understand what to expect from the estate plan and how it will influence inheritance distributions.
Options for Resolving International Disputes
The most common options for dispute resolution include litigation and alternative dispute resolution methods like mediation or negotiation. Litigation involves filing a lawsuit within the jurisdiction where the issue is taking place. This process will involve filing a petition with the appropriate court in the correct jurisdiction, gathering evidence for each side in the case, and then presenting the case before the judge. The judge will then provide a ruling to determine the outcome of the case.
Meanwhile, mediation involves bringing together all interested parties in the dispute in order to have a conversation that yields a mutually agreed-upon resolution. This process offers several benefits over litigation, allowing for more flexible solutions, being more cost-effective, avoiding public record, and being less likely to strain family relationships by avoiding drawn-out legal battles.
Typically, entering litigation should only be a last resort, when mediation or other alternative methods fail to bring results. Litigation is often much more expensive and time-consuming than mediation, making it far less preferable as an option.
Tips for Effective International Estate Planning
With the complexity of multi-jurisdictional and international estates, establishing a comprehensive estate plan is the most fundamental step for preventing disputes. Consider the following as you develop your plan.
Developing a Robust Estate Plan
A detailed and all-encompassing estate plan is the strongest defense against potential will or trust disputes. With an estate plan that accounts for international and jurisdictional laws, you can increase the chances of a smooth administration of your estate and minimize the risks of legal complications.
Take these steps when developing your estate plan:
- Document and account for assets in all applicable jurisdictions in your estate plan.
- Clearly identify all beneficiaries and the inheritance they are entitled to receive.
- Involve legal experts, financial advisors, and tax experts in all possible jurisdictions where assets are located so that your plans are consistent with local laws.
- Regularly update your plan to account for new assets, changes in life or family circumstances, and changes in international or jurisdictional law.
- Clearly communicate your estate plan with all family members and legal heirs.
Having an estate plan that aligns with the laws of each jurisdiction can help clarify how assets should be handled and provide a clear roadmap for an executor to follow as part of their fiduciary duty, proactively minimizing the risk of disputes occurring during probate.
Choosing the Right Legal Structure and Tools
You should also consider various legal estate structures to maximize the benefits of your estate plan. Using various strategic structures can provide greater flexibility, tax efficiency, and protection against issues that can arise during international probate.
Consider some of the following tools, which can protect ownership of assets and establish clear terms for how the ownership of assets should be managed and transferred after one’s death:
- Trusts – In countries where they are recognized, trusts can be used to manage the ownership of assets while moving them away from the taxable estate, and each trust can account for the unique circumstances of the jurisdiction in which it is created.
- Limited Liability Corporations (LLC) – Limited liability corporations can also hold assets away from the ownership of an individual’s estate to protect assets and reduce tax liability.
- Power of Attorney – A power of attorney designates an agent to make sound financial, medical, or business decisions when the grantor is unable to make them due to incapacity or circumstances like travel.
These tools can also offer the benefit of moving assets away from one’s taxable estate to minimize tax obligations and possibly avoid the probate process entirely. For complex estates, it’s advisable to use a combination of these tools to maximize tax benefits, preserve assets for beneficiaries, and carry out the wishes of the decedent. Consulting an estate planning attorney and financial advisor will allow you to develop a tailored plan that accounts for your unique estate and your needs.
Working with RMO Lawyers for International Probate Litigation
High-net-worth individuals trust RMO Lawyers to handle their international probate matters. The team of probate litigation attorneys at RMO has decades of experience in probate matters with a proven track record of success in cases of high-net-worth, complex, international, and multi-jurisdictional estates.
With our approach to international probate litigation, you can expect all the following:
- Personalized Service – Our team works to understand each client’s needs, goals, and family dynamics so that we can work responsibly with them in mind.
- Global Reach – We maintain partnerships with international legal networks and financial experts to ensure proper management of the estate, no matter where its assets are located.
- Comprehensive Strategy – We’ll develop a detailed and personally tailored winning strategy for each client that balances legal, financial, and family considerations.
Our team has an extensive network to provide comprehensive support around your estate, which includes our attorneys as well as law firms and financial experts around the world. With our work in multi-jurisdictional and international probate cases, our attorneys are prepared to resolve your matter as soon as possible while preserving your family’s wishes.
Contact RMO Lawyers Today for International Probate Litigation Guidance
High-net-worth individuals may often find themselves more prone to international probate litigation with disputes surrounding their assets. It’s crucial to work with experienced advisors and estate litigation attorneys who have a track record of working with high-value estates across borders.
Our attorneys have decades of experience supporting high-net-worth individuals with complex estates in navigating the administration of their estates and addressing disputes if they arise. With an international network of attorneys and resources, even if we can’t help you with the full scope of your matter, we will connect you with someone who can. Starting with an initial consultation, we can help you build a strategy that makes the most sense for you.
Schedule a consultation with our attorneys at RMO to start discussing your case.
Glossary
Decedent – A person who has died and left behind assets to be distributed.
Forced Heirship – The concept in civil law countries that a deceased person’s direct surviving heirs, including spouses, children, and grandchildren, have a right to receive assets, regardless of whether the decedent left a will.
Fiduciary duty – The legal obligation that an estate executor or administrator has to an estate and its beneficiaries to act in their best interests.
Beneficiary – A beneficiary is an individual or entity identified in a trust or will as being entitled to receive benefits from the estate.
Heir – An individual who is entitled to receive a share of assets in the event of the settlor’s death based on state intestacy laws.
Probate – The court process in which the assets of an estate are gathered, accounted for, and distributed to the heirs or beneficiaries after an individual passes away, either in accordance with the deceased’s wishes if they had a will or following local intestacy laws if there was no will.
Estate Executor – An individual appointed by a probate court who is responsible for managing and administering an estate and is named as executor in the deceased’s will.
Estate Administrator – An individual appointed by a probate court to manage and administer an estate when there is no will naming an executor, the named executor is deceased, or otherwise cannot serve, including because they are disqualified, suspended or removed.
Personal Representative – An overarching term for a person who is responsible for administering an estate, encompassing the roles of executors, administrators, and trustees.
Power of Attorney – A legal document that grants someone the authority to act on behalf of another person in financial or medical decisions, either while they are alive or incapacitated. It ends at the person’s death.
Common Law Jurisdictions – Jurisdictions where the administration of an estate is usually guided by probate, and the creation of a will can be used to identify beneficiaries.
Civil Law Jurisdictions – Jurisdictions where the administration of an estate and distribution of assets is guided solely by codified law rather than estate planning documents, and heirs must go through a legal process to claim their inheritance.