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Where Taxpayers and Advisers Meet

The riddle of the Sphynx - an Egyptian-born puzzle - but is there an answer?

mmp97
Posts: 34
Joined: Wed Aug 06, 2008 3:28 pm

Postby mmp97 » Mon Feb 06, 2006 6:01 pm

My Egyptian-born wife, UK-citizen but not UK domiciled, resident in the Philippines, has shares and bank accounts which she has bought jointly with me, British Citizen domiciled but not presently resident in the UK.

Which country's inheritance laws will apply on her death to the distribution of her movable assets? Where will probate take place?

The UK presumably will consider that the law of her domicile applies, i.e., Egypt. But Egypt has no concept of domicile and is likely to apply the law of nationality, i.e., the UK.

The way the UK deals with such renvoi seems to me to pose us a problem. If the UK is asked to apply its own law...what happens? UK inheritance law does not apply to non-domiciliaries' movable assets.

Full stop - that is UK law. Or am I confusing the law, with the rules on jurisiction?

Anyway, what is going to happen? Is there any way my wife can insert in her will that she wants UK law to apply, even though she is not domiciled in the UK? Would that be effective?

Lee Young
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Joined: Wed Aug 06, 2008 3:26 pm
Contact:

Postby Lee Young » Mon Feb 06, 2006 11:38 pm

The answer to your fist question is perhaps only one which she can answer. The question she should ask herself is "where is home?". She was born in Egypt, has (presumably) a UK passport (as well as an Egyptian one?) and lives in the Philippines. Where is home, where would she live her remains to be kept? Where, if everything else goes wrong, would she go to start over?

As regards probate (and similar) this will be required where ever she holds assets.

Whether or not UK law will apply to the distribution of her eetate depends where she is domiciled when she dies and the various conflicting rules of the other jurisdictions involved (generally) concerning real property abroad.

Specialist advice should be sought.

Lee Young
lxy@m-b.co.uk
Solicitor, TEP and Chartered Tax Adviser
Moore & Blatch Solicitors

Direct dial: +44 (0) 1590 625840
Fax: +44 (0) 1590 671224

www.mooreandblatch.co.uk
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

mmp97
Posts: 34
Joined: Wed Aug 06, 2008 3:28 pm

Postby mmp97 » Tue Feb 07, 2006 12:26 am

Thanks, Lee, but you have I think not solved the riddle.

I do understand what "domicile" means. My wife is NOT domiciled in the UK. She is domiciled in Egypt. But of course, that does not solve the riddle, since the issue of domicile is not considered relevant by the Egyptian authorities, only nationality - and she is English.

mmp97
Posts: 34
Joined: Wed Aug 06, 2008 3:28 pm

Postby mmp97 » Tue Feb 07, 2006 12:30 am

I should add, I am speculating about Egyptian law, as there is no English web coverage of Egyptian inheritance law / conflict of laws. Perhaps Daniel can answer the riddle.

Lambs
Posts: 1415
Joined: Wed Aug 06, 2008 3:15 pm

Postby Lambs » Tue Feb 07, 2006 1:00 am

M,

It is only a riddle because you have supplied insufficient information. And if you truly do understand the concept of domicile, then could you please do us all a favour and explain it?

Your wife's personal circumstances and intentions are relevant. Her adoption of UK citizenship is a strong, but not necessarily conclusive, indication of UK (presumably E&W) domicile having been acquired by choice. Her stated intentions in this regard are in point - even declarations made at the time of her application.

You say that she is currently resident for tax purposes outside the UK; presumably you will be aware that if she becomes resident in the UK for 17 tax years, then she is deemed "UK" domicile for IHT purposes anyway.

I think perhaps you should consult directly with a suitably qualified professional, since the level of detail required in order to come to a satisfactory conclusion is perhaps inappropriate for a forum discussion.

Regards,

Lambs

mmp97
Posts: 34
Joined: Wed Aug 06, 2008 3:28 pm

Postby mmp97 » Tue Feb 07, 2006 1:41 am

Respectfully, I disagree. It is a riddle because there is no apparent solution to the conflict of laws issue, as often seems to be the case in these situations.

I could supply more information, but it would add little, since the problem would remain the same.

My wife has lived in England only for 3 years during her 51-year life. She was born in Egypt where she lived till she was 20, then lived 9 years in Germany, 3 years in the UK, 9 years in Hong Kong, and lives in the Philippines now. She is likely to live in England for some time in the future, but unlikely to make it her permanent home. She is a part-owner of a UK flat, but then she is a part-owner of flats in Vienna and Slovakia also. Most of her assets lie outside the UK, and she wholly owns two flats in Egypt. She is not a member of a UK political party, belongs to no UK clubs, has no UK burial ground, and visits the UK rarely. She is pretty clearly (are we agreed?) not UK domiciled - though she is a UK national.

I trust you will agree that the addition of more detail has not helped resolve what is surely, in essence, a simple riddle.

Lee Young
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Postby Lee Young » Tue Feb 07, 2006 6:22 am

She would appear to have a domicile of origin of Egypt, but possibly a current domicile of choice in the Philipines. If and when that lapses she would revert to her domicile of origin unless and until she acquires a new domicile of choice.

In my view her UK pasprt is currently of little consequnce when it comes to IHT and domicile and succession. As such applying UK rules to his situation is pointless unless and until she acquires an actual or deemed domicile in any part of the the UK. You therefore need to consider the rules where she is currently domiciled, and how the succession laws of that country interact with those where her other assets are held. You will not get an answer to that complicated question on an open forum.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

mmp97
Posts: 34
Joined: Wed Aug 06, 2008 3:28 pm

Postby mmp97 » Tue Feb 07, 2006 3:24 pm

Thanks Lee...That's what I thought would probably be the answer. So, I will have to read Philippine law (all on the web, thankfully) and Egyptian law to see whether their courts accept jurisdiction. (One would not be able to find a professional who knows both country's laws).

Remains the (simple) question of what happens if no country's courts accept jurisdiction.

Could my wife, by inserting a sentence in the will that she would like UK inheritance rules to apply, secure that result even though she is not a UK domiciliary?

mmp97
Posts: 34
Joined: Wed Aug 06, 2008 3:28 pm

Postby mmp97 » Tue Feb 07, 2006 10:40 pm

Well....Philippine law is clear. The Civil Code says: "Testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found." - i.e., Philippine law says British law applies.

But British law, i.e., the law of my wife's nationality, says it has no jurisdiction.

Now, please don't tell me this is not a simple question. Conflict of laws issues in inheritance cases must arise for an enormous proportion of the British population (given the high proportion of immigrants).

This web site may be set up to deal with common, simple cases, but surely this IS a common, simple case.

Lee Young
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Joined: Wed Aug 06, 2008 3:26 pm
Contact:

Postby Lee Young » Tue Feb 07, 2006 11:55 pm

The situation is common, the solution is NOT simple.

You are confusing succession and tax. The UK has no jurisdiction over taxing your wife as she is not domiciled here - if she were her entire world wide estate would be subject to UK inheritance tax, and that would probably not be desirable. However theoretically there is no pronblem with applying "British" succession rules to her assets in the Philippines - this would presumably mean she has complete testamentary freedom and can leave them to whomsoever she wishes.

One problem though, there is no such thing as "british" law. You say she is of British nationality (I assume born in Egypt to British parents) but the applicable law is either England & Wales, or Scotland, or Nrothern Ireland, beacuse of the three legal jurisdictions we have in this country.

The doctrine of renvoi may well bounce the issue back to the Philippine courts, but if they refuse jurisiction then the situation would be saved by "UK" law in some way, but you would need to seek expert advice.

Richard Frimston at Russell-Cooke Solicitors in London is probably the most high profile exponent of this area of international law. You will be able to find his details on their website, www.russell-cooke.co.uk.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701


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