Testamentary Freedom, Wills And Succession

Testamentary freedom has been in the legal press again recently, this time as a consequence of the introduction of the EU Succession Regulation (No.650/2012) in Europe and the debate as to whether the U.K. would opt in, or opt out, of it.

The regulation binds EU member states that have opted in and in summary, provides that the law applicable to succession to a deceased's worldwide estate will be that of the deceased's 'habitual residence', which is to be established by reference to all the circumstances of the deceased's life in the years up to the time of his death. It expressly excludes questions relating to trusts, tax and matrimonial property. The aim is to create a more uniform approach to succession in contrast to the position previously, where some member states would determine the applicable law by reference to the location and nature of the assets of the estate, or by the domicile of the deceased. This gave rise to conflicts of laws issues which would hold up the administration of the estate and increase the costs of doing so. Worthy as that aim is however, it remains open to question the extent to which the regulation will achieve consistency of approach, particularly given that the U.K., Ireland, Switzerland and Denmark have opted out.

Although the regulation does not have direct application in the Cayman Islands, the discussion about it has brought the topics of wills and succession and more particularly, testamentary freedom, domicile, residence and cross-border estates, sharply into focus once again, issues which are of relevance to practitioners here.

The basic principle in English common law jurisdictions, like the Cayman Islands, is that a testator can dispose of his or her estate in whatever way he or she wishes. Like many basic principles, this is subject to a number of caveats and conditions. Testamentary freedom and the rationale underpinning it were described in the English case of Banks v Goodfellow (1869-70) LR 5 QB 549, at 563, in this way: "The law of every civilised people concedes to the owner of property the right of determining by his will, either in whole or in part, to whom the effects which he leaves behind him shall pass ... The English law leaves everything to the unfettered discretion of the testator ... the common sentiments of mankind may be safely trusted to secure, on the whole, a better disposition of the property of the dead, and one more accurately adjusted to the requirements of each particular...