INTRODUCTION

The status of the Cayman Islands as an International Financial Centre inevitably means that it attracts significant inflows of capital from individuals who are based overseas, and who are legally domiciled elsewhere.

When those individuals die, it is important to understand the conflict of laws issues that can arise. These will need to be addressed before the heirs can access the Cayman Islands assets. This process is underpinned by a combination of Cayman Islands and international law principles and varies depending on whether the deceased died with or without a valid Will. The process also depends on whether that Will has been admitted to probate in another probate jurisdiction, and whether the Will names executors to deal with the process of the administration.

In all cases, we can assist with quickly and efficiently allowing the heirs to gain access to the assets of the deceased, dealing with all of the legal formalities on behalf of the family.

KEY CONCEPTS

Freedom of testamentary disposition: 

The Cayman Islands, following the provisions of English Law, allow a person making a will complete freedom of testamentary disposition. There is no obligation, on death, to provide for any particular people and no obligation to maintain dependents (as there is in life). The Cayman Islands Courts do not have provision to make provision for dependents out of a deceased's estate. 

This concept is complicated by the conflict of laws rules which apply in the case of a foreign domiciled testator (and which are considered below).

Immovables: 

Immovable property is an international law concept (similar to the common law concept of "real property" / "real estate"). Under conflict of laws rules inherited from England, succession to the immovables of an estate is determined by the laws of the country in which the immovables are located. This is known as the "lex situs" rule.  For example, the passing of a house in the Cayman Islands (even for a foreign domiciliary) would be governed by Cayman Islands' law.

Movables:

Movable property is an international law concept (similar to the common law concept of "personal property").  Conflict of law rules provide that succession to movable property is governed by the law of the deceased's last domicile. This is known as the "lex domicilii" rule. So, for example, the passing of a Cayman Islands bank account would be determined according to the rules of the law of the country in which the deceased died domiciled.

Dying without a will

An individual who dies without a will is said to die intestate. The statutory rights on intestacy are set out in sections 29 and 30 of the Succession Law. It is the responsibility of the deceased's personal representatives to ensure that the estate is dealt with in accordance with the law.

It will be necessary for the appropriate person to obtain a Grant of Letters of Administration to allow them to deal with the deceased's estate. That person is called an "Administrator". The Succession Law sets out who is to benefit from an estate where the deceased does not leave a Will. Initially the estate passes to the spouse and the children (in a specified manner), passing to other relatives only where the deceased does not leave a spouse or children.

These default rules often come into conflict with the laws of the testator's last domicile, which may prescribe a different manner of distribution. Such a dispute falls to be determined by reference to the conflict of laws rules, covered above.

Dying with a foreign Will

In many cases, a non-Cayman domiciliary leaves a Will in another jurisdiction. In those cases (and provided that the Will is not limited as to the property to which it applies) it is likely that this Will will apply to the Cayman Islands property and will govern who ultimately receives it. The process by which this occurs differs depending on whether the Will is produced in a probate jurisdiction, or elsewhere. The position also changes depending on whether we are considering Movable or Immovable property.

Where a testator leaves a Will of immovable property, the validity of the part of the Will dealing with the immovable property falls to be determined under the laws of the country where the immovables are situated. So, in the case of immovable property in the Cayman Islands, it is Cayman Islands law that would determine whether the will was valid to deal with that property.

With movable property, the lex domicilii rules will apply, even to property which is located in the Cayman Islands.  This means that the most important questions (including whether the testator had capacity to make a Will and whether the Will is valid) fall to be determined under the law of the testator's last domicile. This issue regularly arises when dealing with an estate for a non-Cayman domiciliary.

If the law of the testator's last domicile confers forced heirship rights, they would be enforced and recognised in the Cayman Islands in relation to movable property, but only if they were owned by the deceased at the date of death (see "Assets Held in Trust", below, for an alternative scenario).

Resealing of Foreign Grants of Probate

Where a Will is made by a testator and admitted to "Probate" in the testator's jurisdiction of last domicile, it is possible to apply to the Cayman Islands Courts for that Grant of Probate to be resealed by the Cayman Islands courts. The resealing of foreign grants is common, with more foreign grants resealed each year than new grants issued.

In order for a grant to qualify to be resealed in the Cayman Islands, the original grant must be made by a probate court in "any part of Her Majesty's dominions, or in any foreign country, or a British court in a foreign country".  Generally speaking, this process is not available where the deceased dies domiciled in a Civil Law country as grants of probate are unique to Common Law.

The grant that then issues from the Cayman Islands' courts is sufficient to deal with the Cayman Islands assets.

Dealing with estates where a reseal is not available

If the deceased died domiciled in a non-probate jurisdiction, it will not be possible to use the reseal process, outlined above. In those cases, the Will can still be valid (and will act to govern the passing of the deceased's Cayman Islands situated assets) but a different process needs to be followed.

In such cases, a new Grant of Probate of the foreign Will is required in the Cayman Islands in order to allow the heirs to gain access to the Cayman Islands estate. The procedure is more complicated than for a Cayman domiciliary.

The Probate and Administration Rules provide that a Cayman Grant of Probate can be issued to the person entrusted with the administration of the estate by a court having jurisdiction in the place that the deceased died domiciled. If there is no such person, then a Cayman Grant of Probate will be issued to the person beneficially entitled to the estate under the law of the deceased's last domicile (or, failing that, to such other person as the judge considers appropriate).

If the Will is in English and appoints executors (who are people appointed to the role of dealing with the administration formalities) or, if executors are not named, but the Will appoints individuals who are described in such as way as to make them equivalent to executors, then a Cayman Grant of Probate can be issued to that person or persons.

When a foreign Will is admitted to probate in the Cayman Islands, it is inevitable that evidence of the foreign law will be required by the Cayman Islands courts. It is also a requirement that the key documents (including evidence of death of the deceased, and the Will itself) need to be translated into English before they can be admitted before the Cayman Islands courts. This can make the process a time-consuming one.

Assets Held in Trust

In many cases, the assets held by the deceased within the Cayman Islands will be held within a Cayman Islands Trust. If this is the case, it is extremely unlikely that a Grant of Probate will be required in the Cayman Islands to access those assets. This is one of the attractions of using a Cayman Islands Trust to own Cayman Islands situated assets.

In addition to this advantage, the use of a Trust (established before the death of the deceased) can prevent the forced heirship rules of the law of the deceased's jurisdiction of last domicile from applying to the Cayman Islands assets.

If the assets of the deceased are connected in any way to a Trust, it is important that we see the trust documentation at the earliest opportunity so that we can properly advise on the steps that need to be taken. The Cayman Islands has enacted specific "fire wall" provisions which prevent forced heirship and other claims being made against trust assets. These provisions do not apply to Wills.