Guernsey Clarifies Uncertainty Over Inheritance Laws

Tom Burroughes

7 January 2009

The offshore island of Guernsey levies no inheritance tax on the estates of the deceased but the jurisdiction has recently acted to clear up a potential legal pitfall facing descendants classified as illegitimate if their parents were unmarried.

Guernsey’s Inheritance Law Review Committee pointed out in a recent statement that in the event of a person dying after 7 May 2008 without making a will, any illegitimate children which that person might have will automatically have a share in that property together with the legitimate heirs. However, this change in the law, passed in 2006, does not apply in any case where a person has died before 7 May 2008.

In Guernsey there is no general capital gains tax, inheritance tax or estate duty, purchase or sales tax, value added tax or capital transfer tax. Since 1960, companies and individuals have paid income tax at the rate of 20 per cent.

The committee stressed that to avoid potential legal wrangles, the easiest option is for people with real assets such as land and property situated in Guernsey to make a will to avoid the risk that such assets will be split up by administrators.

In practice, a potential buyer of property being sold by the heirs of a deceased person will not definitely be sure that the persons purporting to sell the property are its only owners. To avoid arguments about title, the 2006 Law provides that the Royal Court may grant 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.