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These days an increasing number of people have assets in multiple jurisdictions. As a result, estates practitioners are frequently faced with assisting clients in administering an estate with international aspects. Over the next few days I will be blogging on the topic of international estate administration, and some of the key issues that arise from this complex area of law.
The first place to begin when dealing with an international estate is to determine the deceased’s residence and domicile. Residence is important for tax purposes, as most countries tax based on residency. The U.S. is one notable exception – it also taxes based on citizenship. The residency of the deceased is usually determined by looking at where the deceased reported income and did his or her tax filings.
The concept of “domicile” is similar to residence, but with important differences. A person has only one domicile at any given time. Every person begins with a domicile of origin, which is generally the place he or she was born. The domicile of origin can be displaced by a “domicile of choice.” The classic description of domicile of choice is found in Udny v. Udny (1886), L.R. 1 Sc. & Div. 441:
“Domicile of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. … There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation.”
The acquisition of a domicile of choice involves taking up residence in a new place with the intention of permanently settling there and making it one’s principal residence indefinitely. The test requires both a change of residence and the intention to remain there permanently. One can also abandon a domicile of choice, without taking up a new domicile of choice. In such cases, the domicile will revert to the domicile of origin.
The domicile of a deceased person will ordinarily determine the law governing the administration of the estate – except in the case of real property which is usually governed by the law of the situs (or location of the property).
If a person dies intestate, with assets in multiple jurisdictions, the conflict of laws rules similarly provide that the intestacy laws of the deceased’s domicile would apply to the deceased’s moveable property, but that the intestacy laws of the location or situs of any real property would govern that particular asset. As intestacy laws can differ greatly amongst different jurisdictions, this is often a significant concern. It will often be necessary to obtain a legal opinion on foreign intestacy laws from foreign counsel in these cases.
For further reading, check out the 2009 Alberta case of Foote v. Foote Estate which contains a lengthy and detailed analysis of the law of domicile.