Moving Matters: Wills and The Domicile Trap

The concept of ‘domicile’ is an ancient but highly relevant set of legal rules which, in a nutshell, seeks to determine where an individual’s true home is during the course of their lifetime.

As a broad statement of principal, if an adult freely chooses to reside permanently in a particular country and they in fact do reside there, they will also usually be regarded as being domiciled there.

Why is this important? It is because law of domicile governs which system of law applies to the assets/property of a person when they die. HSM Partner, Robert Mack, covers everything you need to know in this article.

This may come as a shock to people who have freely chosen to make the Cayman Islands their adoptive home, for if they become ‘Cayman domiciled’ and they die domiciled here, it means that their worldwide assets (excluding foreign real estate) could be subject to the succession laws of the Cayman Islands.

This can be particularly complex where people originate from places where their estate would normally pass by a formula set by law where their heirs get fixed shares depending on their degree of connection to the deceased.

In contrast, the succession laws of the Cayman Islands permits a person to dispose of his or her assets as they see fit, and are not compelled to make provisions for close family members such as spouses or children if they choose not to do so despite any moral obligation to do so.

This can even become more complex where such an individual dies without leaving a valid Will, as the statutory intestacy rules of the Cayman Islands would then apply.

Even if a person has a valid Will in their previous place of domicile, any change in their domicile status may impact the validity of their foreign Will in relation to non-real estate. The reverse is also true. If a person is domiciled in the Cayman Islands and they take up residence in another country with the intention to reside there permanently, their Cayman Islands domicile is likely to be lost, and aside from Cayman Islands realty, their estate would be subject to the laws of their new place of domicile.

Tips:

1. If you have moved to the Cayman Islands and it is your intention to reside here permanently, then the laws of the Cayman Islands will likely govern the devolution of your estate, with the exception of any foreign real estate you may own. You should consider doing a Cayman Will to cover your assets in the Cayman Islands, and to update any foreign Wills you may have in place.
2. If you are a Cayman Islands domiciled person and you leave the Cayman Islands to reside in another country with the intention of living there permanently, then you are likely to have acquired a new domicile in that country. You should consult an estate lawyer in the new country and consider doing a fresh Will there. You should also update your Cayman Will (if any) to ensure it conforms to the law of your new domicile.
3. If you have moved to the Cayman Islands and you have no intention of residing here permanently, but you own realty here, consider putting in place a Cayman Will to deal with your Cayman real estate and update your non-Cayman Islands Will.
4. If you move to the Cayman Islands without the intention of residing here permanently, but at some point you do decide to reside here permanently, then your domicile may have changed at that moment and you should consider making a Cayman Islands Will and revising any non-Cayman Islands Will you may have.

Conclusion

The rules of domicile are highly complex and have been greatly simplified here. If you have moved from or to the Cayman Islands, it is worthwhile exploring the impact this decision may have on your estate planning with one of HSM’s specialist attorneys.