Although it is often said that a person may not make a Will in Cyprus, this is in fact a gross oversimplification of the legal provisions regarding inheritance in Cyprus. In fact, some individuals are able to make a Will for their whole estate and others are entitled to make a Will for the, so-called, “disposable portion” of their estate. It is therefore tremendously important to ascertain whether you are entitled under law to make a Will and how much of your estate it may cover. There are a number of important considerations to bear in mind when writing a Will, some of which are discussed below.
In order to make a Will one must be 18 years of age and of sound mind. Sound mind means that a person must have sufficient mental capacity to understand the nature of the document he is signing and the effect it will have. This can prove more difficult to establish in some very elderly persons or those suffering from mental illness. A physical illness that meant that a person took drugs that might also affect his mental state may also interfere with his capacity under law.
It is advisable to appoint executors in the Will. This will give the testator a choice as to who will deal with his/her estate when the time comes. There is no legal restriction on the number of executors that may be appointed, although it is common practice to appoint one professional firm (for example a law firm) or two individuals (for the primary reason that one may pass away before the testator). The job of the executors is to collect in the assets of the deceased, pay his outstanding liabilities, expenses and taxes and distribute the remainder in accordance with the testator’s wishes as outlined in the Will.
A person may leave a “specific” or a “non-specific” gift in his Will. A specific gift is a gift of an identified item to a particular named person. This is a mechanism most testators will use to leave a personal possession to a particular individual. Alternatively a non-specific gift can be made, which will leave something more general such as “all of my personal possessions” to a particular person.
Once the executors have made all of the gifts, it is imperative that a Will contains a clause to deal with the residue (in other words, the remainder of the estate). It is the residue that will be used to pay taxes and funeral expenses. After this the rest of the estate will be left to the residuary beneficiary/ies. It is usually recommended to include clauses covering a number of case scenarios in terms of who may or may not have pre deceased the testator. Moreover, in the case of a gift to a person under the age of 18, a trust will be created for the assets to be held on behalf of the beneficiary until he/she attains the age of 18 (or another age specified in the Will).
There is no estate duty imposed in Cyprus. However, it should be noted that a person who is domiciled in another jurisdiction may not necessarily avoid the inheritance tax due under his home jurisdiction merely by virtue of assets being located in Cyprus, or residence on the island. Advice must be sought from a specialist lawyer able to deal in more complex international estate planning in order to ensure that correct steps are taken to minimize tax liability within the confines of the law.
Review and Amendments
It is strongly advised to review a Will regularly and, in any event, upon the happening of major life events such as a marriage, birth, death in the family, divorce, moving house or coming into significant money. If upon review a person desires to change his Will a small amendment may be effected by execution of a codicil (an amending document) or alternatively the Will may be destroyed and re-made in accordance with the testators new wishes.
Estate planning in Cyprus is exceptionally important for anyone who is domiciled on the island or who owns immovable property here. Any will document which is drawn up will need to comply with all of the specific formalities in order to be effective and regularly reviewed. Michael Chambers & Co. LLC is able to advise clients on all aspects of estate planning and inheritance including estates comprising international assets. We are able to advise on inheritance tax planning devices as well as to assist in undertaking administration of estates. If you wish to speak to one of our wills and estates lawyers, please contact us.