Foreword
Domicile is defined as a person's
fixed and permanent legal home where they intend to spend the
remainder of their life. It depends on the physical fact of
residence but not the same as residence for tax purposes. There are
four categories of domicile to be familiar with.
Introduction
If there is any question of doubt
about a person's domicile, it is a good idea to have a domicile
clause inserted when preparing a will. The testator thereby provides
a declaration of where he considers himself domiciled at the time of
making the will. Of course, it is the place of domicile as the date
of death which is crucial for Probate purposes but in cases of
doubt, the testator's intentions, as shown by his declaration is his
will, provide valuable evidence.
If the reader / client have retired
to jurisdiction (A) from Jurisdiction (B) like to establish that
they have abandoned their (B) domicile of origin. The following
clause as an example could be appropriate.
The importance of such a clause is
that if the testator dies owning (B) situate movable estate such as
Government Treasury Stocks, the declaration of domicile is evidence,
supported by a declaration given by his lawyer or executor, that he
acquired a domicile of choice in (A) which he maintained until his
death. The executor would write to the appropriate government
departments to obtain the necessary paperwork for clearance from
inheritance tax.
Domicile of Origin
This is the domicile assigned by law
to a person at birth. Legitime children take the domicile of their
father and illegitimate children take the domicile of their mother.
It is not necessarily the place
where a person was born. Many persons of English domicile were born
in the colonies when their fathers where in colonial service, with
increasing mobility of labour, many people work in a number of
different countries during their lifetime and have children born to
them when they have not abandoned their own domicile of origin. If,
on the other hand, that parent has or has acquired a new domicile of
choice, then this could become the domicile of the child.
Domicile of Choice
A domicile of choice I acquired by
going to live in a different state or country with the intention to
remaining there permanently. The person has to be mentally competent
and over the age (subject to the jurisdiction) to make a legally
effective choice. Intention to change domicile is not sufficient as
actual residence in the new place must actually have taken place.
Evidence of acquisition of a new
domicile of choice would include permanent employment, purchase of
residence, membership of clubs and associations, purchase of grave
space, opening new bank accounts and severing all such connections
in the old country by realising all assets there and not having
available accommodation there. A vital part of evidence is
declarations which are made and particular importance is given to
making a new will containing a declaration of domicile. "The
change of a domicile origin must be proved beyond reasonable doubt,
while the change of a domicile of choice may be proved on the
balance or probabilities"
Domicile of Dependency
A dependent person (e.g. a minor or
a wife) has a domicile of dependency based on that of the parent,
guardian or husband. This leads to the problem of conflict of law
between different jurisdictions and also to the difficulty that many
countries do not have any concept of domicile whatsoever but apply a
unitary law based on nationality or on habitual residence i.e.
Denmark, Italy.
Under the Law Society proposals, the
domicile of children would depend on the country which they are most
closely connected, which would be where their parents are both
domiciled or, if domiciled in different countries, the parent with
whom they live. That domicile would be retained on attaining the age
of 16.
Fiscal Domicile
This is a legal fiction invented to
collect tax revenue. For capital transfer tax purposes (now
inheritance tax), are introduced in many jurisdictions. Conversely,
under those of various jurisdictions a person can be deemed domicile
in any of the countries of the UK for tax purposes if resident there
for not less that seventeen years for the last twenty years.
Those rules on domicile may be
overridden by the Double Taxation Conventions on inheritance tax and
Gift tax. Under "tie breaker" rules a person may be treated as
domiciled for Treaty purposes in the other Contracting States and
this overrides UK domestic rules. Subject to the jurisdiction,
Exposure to Inheritance Tax may then be limited to land or business
assets, freeing up stocks and shares from exposure. Proper
legal and tax advise is strongly recommended.
