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Guernsey Committee Releases Inheritance Law Statement

by Robert Lee, Tax-News.com, London

22 December 2008


Guernsey’s Inheritance Law Review Committee has released a statement regarding changes to inheritance tax law, which were introduced earlier this year. The Committee has decided to clarify the changes as many were uncertain as to their standing regarding inheritance taxation.

The Committee emphasised that “persons owning real property (i.e. land, houses and buildings) situated in Guernsey should make a will which clearly identifies who they wish to inherit that property and so avoid the possibility that the property will need to be placed into administration”. The Committee also suggested that those already with a will should consider seeking legal advice as to whether any changes are necessary or desirable.

The Committee stated the following regarding the implementation on May 7, 2008, of the Law Reform (Inheritance and Miscellaneous Provisions) (Guernsey) Law, 2006.

“It has come to the attention of the Inheritance Law Review Committee that some doubt has arisen as to its effect and as to the consequences for people wishing to regulate their affairs and to make provision for the disposition of their property after their death.”

“One important effect of the 2006 Law was to remove discrimination against illegitimate children in matters of inheritance. This amendment was required to ensure Guernsey’s compliance with the European Convention on Human Rights and other international obligations. The removal of such discrimination means, in the case of real property situated in Guernsey (such as houses and land) that, in the event of a person dying after May 7, 2008 without making a will, any illegitimate children which that person might have (even if he and/or his family are not aware of their existence) will automatically have a share in that property together with the legitimate heirs. The 2006 Law does not apply in any case where a person has died before May 7, 2008.”

“The practical effect of this is that a prospective purchaser of property being sold by the heirs of a deceased person will not usually know beyond doubt that the persons purporting to sell the property are its only owners. In order to enable such heirs to sell the property and give good title to the purchasers, the 2006 Law provides that the Royal Court may grant an order called an Administration Order which authorises a Court-appointed Administrator to sell the property, subject to making enquiries as to the existence of any unascertained heirs. Notice is published in La Gazette Officielle and evidence is supplied to the Court by affidavit. Once the Order has been granted, the property may be sold and the proceeds may be distributed, with the permission of the Court, when it is satisfied that it is appropriate to do so. Sale by a Court-appointed Administrator gives statutory good title to a purchaser. It was envisaged by the Committee, in formulating its proposals for the procedure, that in most cases Administration will be a relatively simple procedure, which need not delay the sale of the property, or the distribution of the proceeds, for a lengthy period. Although it is entirely a matter for the judgment of the Court, it is likely that there will be delays in the distribution of the proceeds of sale only where there is a real possibility of an additional heir being found. In cases where there remains a real, as opposed to fanciful, uncertainty, the proceeds of sale will not be distributed until six years after the sale.”

“The Committee is aware that this procedure is an additional hurdle for the heirs to real property to overcome but considers that it is the best solution to give certainty where there is uncertainty arising in the circumstances outlined above. The Committee is monitoring the operation of the administration procedure and will bring further proposals to the States if it considers that any improvements can be made.”

“In the meantime, the Committee would like to emphasise that the uncertainty which gives rise to the necessity for this procedure can be avoided if owners of real property make wills naming the person or persons whom they wish to inherit that property on their death. There will then be no doubt as to the property’s ownership after their death, and the property can be sold by the named heirs without delay.”

“Although the purpose of this statement is to stress the need for persons to make wills of real property in order to avoid Administration, the Committee would also wish to advise the public that the removal of discrimination against illegitimate persons can also affect the distribution of the personal possessions (such as money and other moveable items) of a person after death and it would be advisable for any person who considers that he may be affected to seek legal advice. “

The Committee also stressed that the changes to the inheritance law made in May, are completely separate from the possible future introduction of testamentary freedom, which the Committee is currently working on.


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