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  1. Law
August 1, 2013

Boris Berezovsky’s will: Unravelling an estate as complex and contested as his life

By Spear's

Poor old Boris Berezovsky isn’t even having an easy time of it in death, with his will now shrouded in claim and counter-claim. John Goodchild explains

BORIS BEREZOVSKY WAS a colourful character, and controversy and speculation have pursued him after death. Apart from the cause of his death, there has also been a huge amount of conjecture about Mr Berezovsky’s estate.

Were some of his assets owned by a trust? Did his liabilities exceed his assets? Is it true that his will appointed five executors and that they have all refused to act — and, if so, why? 

In time we may learn the answers to these and other questions. In the meantime, one certainty is that the conjecture around his estate highlights issues in the field of international tax and estate planning.

Cold War

Mr Berezovsky’s death highlights the differences between the succession laws in Russia and England. In Russia the Civil Code prescribes the rights of the different categories of heir — there are seven degrees of heirs in total.

The succession law position in England is rather different. In broad terms England allows an individual freedom to dispose of his estate entirely as he wishes.

The only restriction on this is where he fails to make ‘reasonable financial provision’ for a spouse or ‘reasonable financial provision for maintenance’ of other categories of claimant. Those potential claimants may make an application under the Inheritance (Provision for Family and Dependants) Act 1975 to override the will in order to achieve the requisite level of provision.

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At present the 1975 Act only applies to individuals who die domiciled in England and Wales and would not apply to Mr Berezovsky’s estate, assuming he was not domiciled in England. However, it is proposed that the 1975 Act should be applied to foreign domiciled individuals to the extent of their estate in England. 

If Mr Berezovsky made an English form will and the estate is solvent, any executor or administrator would be in the interesting position of having to deal with the interaction of English and Russian law. 

Will They?

While the law concerning signing formalities should not be an issue, the position on the validity of any gifts is more interesting. The validity of a gift of English land would be governed by English law but gifts of non-land assets (whether they were located in England or elsewhere) would, so far as English private international law is concerned, be determined by the individual’s law of domicile at death. In Mr Berezovsky’s case, that would probably be Russian law.

The English probate registry does not assess the validity or otherwise of gifts in wills before granting probate, so executors need to be alert and to check this issue themselves.

If, for example, the executors distributed according to the terms of a gift in an English will when that gift was invalid as a matter of Russian law, they could face personal liability to compensate any disappointed Russian-law heirs. 

Another deterrent to would-be executors is the position where there is uncertainty as to whether the pre-death liabilities of an individual exceed the value of assets.

As a matter of English law executors are liable for all debts, whether they arose in England or abroad. But in Russia, if heirs ‘accept’ their inheritance they will be responsible for the full amount of the deceased person’s debts, even if the debts exceed the value of his assets. In England the executors (and, so, ultimately the heirs) are not responsible for the full amount of the pre-death debts if they exceed the assets.

If all executors refuse to act and the estate is insolvent, the English court can at the request of a creditor make an order appointing a receiver to administer the estate. That would be a temporary measure until such time as a trustee in bankruptcy was appointed to take over the administration.

It is fairly rare for every nominated executor to refuse to act, particularly when there are as many as five, and if Mr Berezovsky’s estate is thought to be insolvent that may well have been the reason. Anyway, we will no doubt find out more as and when the facts emerge. 

John Goodchild is partner and head of group at Pemberton Greenish LLP


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