Cross-Border Succession Planning

Are you a Kenyan in the diaspora with property outside Kenya and back home?

Or maybe you live in Kenya, own a family home here, have property in the UK, and maybe some shares in a US company?

It could even be the other way round. You are a foreign national with property back home in the US or UK, with a business, land, or property in Kenya.

It doesn’t matter. What matters is that you have multi-country asset holdings that you want to distribute to your loved ones.

You’ve made a will.

Your estate is covered, and your beneficiaries will inherit their rightful assets when you’re gone, right?

It’s not that easy.

When your assets cross borders, a will may not be enough on its own. Yes, a will is an important part of succession planning, but with different jurisdictions, it becomes complicated.

These jurisdictions have different rules governing wills, inheritance tax, property, and estate administration.

This is where cross-border succession planning comes in handy. In this blog, we highlight how each jurisdiction handles succession, friction points, and how to navigate succession if your estate crosses borders.

What Makes Cross-Border Succession Planning Complicated?

Cross-border succession rules vary from one jurisdiction to another. What works in Kenya might not work in the UK or US, despite there being a will, a trust, or clear intentions from the deceased.

For example, you might find that a will is enough for the Kenyan system, whereby the deceased’s written wishes are the final say.

The same will might be disregarded in other jurisdictions, especially where civil law systems impose forced heirship irrespective of the deceased’s personal wishes.

For instance, in the US state of Louisiana, the legal system enforces a version of forced heirship where a parent is required to leave a specific portion of their estate to certain children regardless of what was written in the will.

There is no universal law that governs an estate, property, or assets spanning different jurisdictions. Each jurisdiction where you own an asset may apply different rules, and this affects succession.

These effects can include delays, disputes, and financial losses.

Each jurisdiction applies its own rules to determine:

• Whether your will is valid there.
• Who is entitled to inherit your estate, regardless of what your will says.
• Whether a grant of probate from one jurisdiction is recognized in another.
• How to treat immovable assets like land and houses compared to movable ones like shares and bank accounts.

That said, succession rules across borders share some aspects while differing in others. Let’s do a quick comparison between the succession rules across Kenya, the US, and the UK.

Kenya vs The UK vs The US: Succession Rules Across The Board

Your cross-border assets are subject to a mix of common law practices, unique local statutes, and varying tax regimes.

Rules of Succession: Movable and Immovable Assets

All three countries follow the common law divide between movable and immovable assets. However, the law governing how these assets will be shared varies from one jurisdiction to another. In the US, this variance even goes further, and what applies in one state might not apply in another.

You’ll come across the words domicile and situs when navigating succession rules for movable and immovable assets.

Domicile is the permanent legal home of the asset owner.

Situs is the physical or legal location of a piece of property.

• Immovable assets (Situs law): In the three countries, where the land is located matters because the laws of that country apply. In that case, succession for land in Kenya follows Kenyan laws, a home in the UK follows UK laws, and an apartment in Los Angeles follows the specific laws in the US state of California.
• Movable assets (Domicile law): The law of the country where the asset owner lived permanently applies to movable assets like bank accounts and shares. However, in the UK and the US, domicile is scrutinized to ensure that permanent residency was genuine, with lifelong ties, and not a calculated move to evade statutory obligations.

Testamentary Freedom vs Forced Heirship

All three countries don’t practice forced heirship. However, testamentary freedom varies across the three jurisdictions.

• Kenya: Kenya’s succession laws are strict about protecting dependants, including spouses and children. A foreign will that disinherits dependants can be altered if the courts rule that it fails to provide reasonable provision for dependants. Moreover, sons and daughters have equal inheritance rights.
• The UK: The UK’s succession law is moderately strict when it comes to testamentary freedom. It allows the asset owner to leave their inheritance to whoever they like. However, dependants can challenge the will in court if the will leaves unreasonable financial provision.
• The US: This is the least strict regime among the three, whereby a person can disinherit their children completely. However, a spouse is a different case. Some state laws feature an elective share statute that prevents an individual from disinheriting their spouse. A spouse can legally claim a percentage of the estate regardless of what the will says.

Will Execution and Succession Administration

Your job is to write the will. Executing the will is another job altogether, and it’s done by the relevant legal system.

Will execution and succession administration vary significantly across Kenya, the UK and the US.

• Kenya: The Law of Succession Act governs will execution in Kenya. The will must meet specific requirements and acquire a grant of probate (letter of administration) from the High Court. Foreign wills must be resealed too before they can be used.
• The UK: A will requires a grant of probate from the Probate Registry.
• The US: Will execution rules and probate procedures vary from one state to another. Requirements and timelines depend on the state laws.

In all three countries, foreign wills aren’t automatically enforceable. Local courts require separate examination and recognition of wills, and a fresh probate process before administration.

Taxes and Fees

When planning your succession across borders, there is more to consider other than who receives which asset. Taxes and administration fees can change the whole picture.

Transferring your assets from one jurisdiction to another might introduce unforeseen tax obligations.

For instance, in the UK, an estate must be valued and the inheritance tax position considered during the probate process.

In the US, some assets are subject to US estate tax. These include real estate and some US securities (stocks, bonds, etc).

As of this writing, Kenya doesn’t impose any inheritance tax or excise duty on cross-border assets during the succession process.

How to Approach Cross-Border Succession Planning

If you own assets across various jurisdictions, here’s how to plan your succession:

• Map your assets: Before you can even start planning your succession, identify all your assets and their location. Include both movable and immovable assets such as real estate, property, bank accounts, investments, and shares.
• Identify relevant jurisdictions: Familiarize yourself with the succession rules in all relevant jurisdictions to understand what happens to your assets after you’re gone.
• Regularly review your wills and ownership structures: Your initial choices may change over time because of circumstances such as new heirs and new succession regulations. Review these arrangements regularly.
• Seek professional advice: Keeping tabs on the changes or the latest developments in succession law across jurisdictions is not easy. There are professionals whose expertise lies in this area. Seek their professional advice to stay on top of your succession arrangements.

Common Cross-Border Estate Planning Mistakes

Avoid these mistakes when estate planning for international assets:

• Assuming one will is enough to administer all your assets, including international ones.
• Ignoring the role played by location in international inheritance law.
• Overlooking tax and administration fees that might be incurred during estate administration.
• Treating the UK and US as a single legal system with one-size-fits-all inheritance rules.
• Waiting until the deceased is gone to resolve succession conflict. These issues are easier to resolve while the owner is still living.

FAQs

Do I need a separate will for each country for international assets?

Not always. Depending on how a will is written, it can cater for all assets, including international ones. However, due to significant differences between legal systems across borders, having separate wills for each country may prove useful.

Is a UK will valid in Kenya?

Yes and no. While a UK will (grant of probate) is enforceable in Kenya, it needs to be resealed through the Kenya High Court. It’s only after this “resealing” that the will can be used to administer assets in Kenya.

Is a US will valid in Kenya?

Similar to a UK will, a US will is not automatically validated in Kenya. It must be examined and resealed through the High Court of Kenya.

Get Your Kenya, UK, and US Estate Plan Right Before It’s Too Late

We’ve established that a single will is not always enough to handle assets that span various jurisdictions. The succession laws of these countries differ significantly, and they affect how your estate is administered. Don’t wait until it’s too late to fix the gaps in these legal systems.

If you own property and assets across Kenya, the UK, and the US, plan your succession early enough. Talk to a succession lawyer while you’re still here to save beneficiaries the headache of delays, disputes, and unintended outcomes.

At WAREN Law, we provide professional assistance in estate planning and intergenerational wealth transfer. Let us help you get international estate planning right the first time. Schedule a consultation to get started.