Cross-Border Succession and Inheritance: Determining the Applicable Law for Immovable and Digital Assets in an Evolving Global Legal Order
Author
Uchit Kesarwani
Law Intern, Law Vaani
Abstract
The recent increasing flow of people, capital, investments and digital assets across territorial boundaries has thus revolutionised succession law. One might not only have immovable assets in India, but bank accounts in the UAE, shares in companies, cryptocurrencies andcloudstorage located in other multiple jurisdictions. In such a scenario the question which arises is which law should determine the disposition of one’s estate including those assets, on his/her death?
The private international law normally takes resort to the principle of lex situs in case of immovable properties, while in cases of movable property it traditionally relied upon a personal connecting factor viz.
The connecting law being associated with domicile or the country of usual residence. The traditional principles are of limited applicability in the context of digital assets that by their very nature do not have a fixed physical location. This article explores the international private law framework for cross-border successions from an Indian perspective, analyzes the legal challenges of identifying the connecting laws for immovable and digital assets and discusses related judicial development and comparative cross-national methods. It concludes with some suggestions for legal reform so that a much-needed clarity and protection to the rights of heirs can be ensured, and the succession law in India evolves with technologies to come .
Keywords: Cross-border succession, inheritance, private international law, lex situs, domicile, digital assets, cryptocurrency, Indian Succession Act, conflict of laws.
Introduction
Globalization is radically changing how we create and hold wealth. It is no longer uncommon to live in one country, own property in another, hold shares in a foreign company, and own significant digital assets stored online by international service providers. While global property ownership has offered economic benefits, it has given rise to complex succession law problems when we leave our worldly affairs behind us to the “great beyond”.
Cross-border succession exists when a decedent’s estate connects to more than one jurisdiction. These connections can arise by reason of the decedent’s nationality, domicile or usual place of abode, or the situation of his or her assets. With each jurisdiction having different succession law and conflict of laws rules to determine the applicable law, navigating your estate when more than one country’s law is implicated can be challenging. There can be more than one forum at which the decedent’s estate could be dealt with, with those forums potentially applying different sets of rules to different assets of the estate, often leading to confusion, potential litigation and delays.
Historically, principles of private international law distinguish between movable and immovable assets. The succession of immovables generally follows the law of the country in which the property is located (lex situs) and the succession of moveables is typically governed by the law of the decedent’s domicile or usual place of abode. These principles have long provided sufficient solutions for the disposition of traditional assets such as land, houses, cars and cash balances.
Today the proliferation of digital technology is rapidly changing the complexion of personal wealth, and valuable assets, such as cryptocurrencies, online trading platforms, digital wallets, NFTs, domain names, cloud-stored intellectual property, and social media profiles are becoming more common elements of estates. Unlike tangible or, to a limited extent, traditional forms of intangible property that have relatively clearly defined locations, many digital assets are based on decentralized networks, lack a readily identifiable geo-location, or the location might be numerous. This makes the application of traditional rules of conflict of laws highly complicated.
In India, the existing legislative provisions on succession include the Indian Succession Act, 1925, as well as several personal laws that cater to different communities. While they effectively regulate inheritance of conventional assets, they fall short of providing clear guidelines for the cross-border succession of digital assets. Accordingly, Indian courts must necessarily resort to general principles of private international law and comparative studies when addressing the complicated cases that emerge from the transnational nature of modern wealth.
This paper takes up this challenge by discussing the legal rules and principles that are applicable to cross-border succession of immovable property and of digital assets. I discuss how these principles and the relevant legislation were developed to deal with an older era of transnationality, what challenges have been caused by new forms of digital property, cite major judicial cases on the issues, and reflect on what changes need to occur for more useful and forward-looking laws in this area.
Legal Framework Governing Cross-Border Succession
The area of the law that applies to cross-border succession is predominantly governed by Private International Law, the legal regime we typically refer to as the law of conflict of laws. This area of law has the aim of deciding what legal jurisdiction’s law will be applicable and which court is to have the power (jurisdiction) to give judgment on issues relating to a deceased person’s succession and its properties, without necessarily determining the beneficiaries of the estate. This is decided based on 3 main connecting factors of a deceased person in question:
- Lex Situs of the property;
- The domicile or habitual residence of the deceased person; and
- The Nationality of the deceased person if it is a connecting factor that can be used by the relevant legal system.
The principle of lex situs, has classically determined succession relating to immovable property, which consists of property permanently annexed to the earth and therefore part of the territorial area of a country. The reason for this rule stems from principles of legal certainty and territorial sovereignty that countries observe when dealing with lands and the immovables annexed thereto. As per movable property however, a majority of other countries generally go by the lex domicili (law of the deceased’s country of residence/ domicile).
This is due to the reason that movable property is naturally tied to the person as a whole as opposed to a particular geographical location.
Therefore, the application of law for succession may vary whether the deceased has left behind his immovable or movable estate or both as mentioned before.
Succession for Indian cases for cross-border issues typically follows provisions provided under the Indian Succession Act, 1925, which regulates testamentary as well as intestate succession. This law applies to various categories of persons but the applicable succession law to its constituents vary for different religions. Furthermore, legislations such as the Transfer of Property Act, 1882, the Registration Act, 1908, and the Code of Civil Procedure, 1908 also become applicable when there are international transfer of property or recognition of foreign probate orders and other similar cases with the same context.
However, for digital inheritance that involves cross-border issues, India does not yet have a clearly outlined legislated approach for determining the appropriate governing law. The gap of legislative rules for cross-border succession of digital assets in India is evident and increasingly pronounced given rapid technological advancements, making comparative study of international practices and judicial interpretation imperative.
Cross-Border Succession of Immovable Property
The place of the private international law where it is situated immovables has always played an important role in legal matters. The land can neither be transmitted from one Country to Another like other movables and are very much tied with sovereignty and are exclusively regulated by the domestic legislation of the place of their location. Succession of immovables generally comes within the rule of lex situs where all succession disputes related to immovable properties would always take place at the place of location of such property.
The general reason as to why has the lex situs rules been unanimously accepted by all countries is based upon the concept that every Country is exclusive sovereign within its territory, for purpose of directing ownership and transfer of title to land and that the rights related to transfer of property, registration and taxation and ultimately, the succession is exclusively to be determined by the national rules of the country where the property has been located or property concerned has located, even if the nationality or domicile of the concerned person in India .
For example if a Indian citizen domiciled in Australia has a property in U.P in India then succession of such property would definitely come under the Indian Succession Laws. Even if the deceased owned any property such as residential flats or houses abroad such as in Dubai or London then the law of respective countries would be applied in determining the succession of such property. In India in the case of immovables, succession may arise under both the law for testate or interstate successions i.e under the Indian Succession Act 1925 (whenever applicable) to properties in and outside India .
However the ownership and transfer, transfer by gift and sale are all through Transfer of Property Act, and their subsequent registration, which is covered by the registration laws and property law of land. India recognises the local legal norms for recognition of the foreign probate to immovables in its territory. Generally, the Indian Courts take care, to give effect, to the foreign probate, where it is proven by competent court, where it is appropriate under the principles of the Indian Law and more particularly concerning public policy in India.
The practical consequences of following lex situs rules. In spite of the above, sometimes there may be difficulties, the deceased owned properties in more than one Country will inevitably raise two or more series of succession proceedings i.e in each country where he had property. Therefore, beneficiaries would then be forced to go into multiplicity of successive proceedings and that at each Country for each set of properties would thereby lead to costly proceedings and delay etc.
Another problem lies that every country is having different laws of Succession, inheritance, Matrimonial property regime and the laws dealing with restriction on a transfer of property to Foreigners etc that lead to more serious disputes.
Also the Countries that allow forced heirship rule where it is mandatory to transfer a share to certain members irrespective of any instruction on a Will, then with international distribution of Assets this lead to difficult situations for beneficiaries when assets are spread in different countries and thus lead to multiplicity of conflicts between testamentary freedom and forced heirship rules, a well established concept in Private International Law. While lex situs seems most stable for immovables, international mobility is going to lead to much cross–border activities, which could certainly prompt some form of International co– operation, the establishment of Mutual recognition procedures for Probate or clearly defined, unified conflict of laws rules that could significantly facilitate this movement in future.
Cross-Border Succession of Digital Assets
A new dimension of succession law has emerged with the advent of digital assets. Unlike traditional forms of property, they are often intangible, technologically complex and spread across various jurisdictions. As increasing amounts of an individual’s wealth and personal information are stored online, succession planning has become much more complicated than ever before.
Digital assets include, amongst others, cryptocurrencies, digital wallets, online bank and investment accounts, domain names, websites, cloud storage data, emails, social media profiles, digital photos, online gaming items, and digital intellectual property. Many of these have substantial financial value, whereas others are of high personal or sentimental value to the heirs of the deceased.
The core legal problem, at first blush, is in determining the location of a digital asset. Traditional principles of conflict of laws rely on identifying the geographical location of the property in question. Digital assets are most typically located on cloud servers or on decentralised blockchain networks operating across multiple countries simultaneously. A cryptocurrency wallet might be held by an individual in India, managed through an exchange registered in Singapore, while the blockchain which validates the transaction is executed via machines located around the world. In such circumstances it is not clear as to how the courts might determine the location.
There is currently no globally accepted rule of conflict of laws governing the succession of digital assets, unlike immovable property. Various approaches have been mooted by commentators and courts, including the applicability of the law of the deceased’s domicile or habitual residence, or perhaps the law of the place where the digital platform or service provider is based. Every proposed solution has advantages, but at the same time gives rise to uncertainties in international succession.
The difficulties are compounded in the sense that access to many digital assets is governed by contractual rules specified by digital platforms, such as social networking or cloud storage sites, cryptocurrency exchanges, or digital payment providers. These sites have terms and conditions that can restrict access after death or enforce a particular jurisdiction’s laws. This may mean that even when succession law determines that the heir is entitled, access may still be physically prevented.
In India, there is no specific legislation which addresses the matter of digital inheritance. The current legislation was drafted long before the creation of blockchain technology, cryptocurrencies, or cloud based assets. As such, the courts have had to interpret the general principles of succession law and apply them to digital assets, having regards also to contractual terms and Private International Law principles in cross border estates. The inadequacy of legislation unfortunately leaves the executors of the estate, their beneficiaries and financial institutions dealing with assets in a quandary.
Several foreign jurisdictions have made advances in resolving this matter. In many of the US states the RUFADAA provides executors and fiduciaries the capacity to access certain digital assets on behalf of the deceased, in accordance with their wishes, or to not do so in keeping with privacy concerns. The EU, likewise, has been moving towards addressing digital inheritance in broad data and succession legislation, though there remains no overarching international code on the matter.
The escalating economic significance of digital assets ensures that there is undoubtedly a need for legislation reform. With digital wealth accumulating at such a high pace, succession law will soon need to clarify principles regarding their jurisdiction, possession, succession, and rights for legal heirs. Modern laws regarding what constitutes and what determines the governing jurisdiction of digital assets will be of crucial importance to alleviate future cross border inheritance disputes.
Important Judicial Developments and Comparative Jurisprudence
Despite the scarcity of litigation in India dealing directly with cross-border succession in digital assets, Indian courts have always upheld the sanctity of private international law in all succession and probate proceedings that include foreign elements. In absence of specific laws on point, the courts usually resort to traditional conflict-of-law provisions, statutory enactments, and persuasive foreign jurisprudence.
An important judgment in the realm of private international law is Satya v. Teja Singh, (1975) 1 SCC 120. While this case dealt with recognition of foreign matrimonial decree, the Supreme Court held that a foreign judgment must be within the competent jurisdiction, should not be against principles of natural justice, and not repugnant to the public policy. This judgment has also had a significant impact on foreign probate proceedings.
Another landmark judgment is Y. Narasimha Rao v. Y. Venkata Lakshmi, (1991) 3 SCC 451, where the Apex Court clarified that the courts in India do not execute foreign judgments automatically. The judgment explicitly mentioned that the recognition is allowed when conditions laid down in the Code of Civil Procedure, 1908 are satisfied. This principle becomes relevant when executors rely on foreign successions certificate or probate concerning assets situated in India.
Internationally, in May 2015 the EU Succession Regulation No. 650/2012, also known as Brussels IV, was implemented; the Regulation is a major development regarding cross-border succession and deals with matters of succession of both movable and immovable property of persons resident in an EU Member State. It has introduced a new, universal concept of the applicable law governing succession of the whole of an estate and has prescribed habitual residence of the deceased as the main connecting factor, while the person may also choose to apply the law of nationality in certain circumstances. The regulation facilitates cross-border succession administration and reduces jurisdictional conflicts.
In the U.S., there have been legislative efforts in dealing with the succession of digital assets on the State level with enactments like Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in 2016. RUFADAA authorises the user to grant the fiduciary specific access to all or any specified digital assets upon death. While its applicability varies among states, RUFADAA represents a significant development towards incorporating digital assets into the modern definition of property.
Critical Analysis
For immovable property, the existing rules for cross-border succession have worked satisfactorily so far. The “lexsitus” rule is satisfactory because it offers clarity, pays due attention to territorial sovereignty, and helps regulate the possession and alienation of land within the local regime. However, it has not yielded good results in relation to digital property, which is not as easy as physical property to attribute to a geographical location.
One of the critical drawbacks of existing conflict-of-law approaches is the lack of a clear and universally accepted definition of a digital asset. Various jurisdictions classify cryptocoins, digital tokens, virtual assets, cloud data, etc. Differently, thus blurring the lines about the classification of such assets and their subsequent inheritance.
Another problem is potential conflicts between competing laws in the same situation. A particular estate can involve the law of the deceased’s domicilium, the laws of the country or countries in which service providers were situated, the laws of countries in which online accounts are registered etc., to give an added complexity to claims for an increased litigious and administrative cost. India currently lacks a proper statutory mechanism dealing with digital succession. The Indian Succession Act,1925 was adopted at a time when blockchain and cryptocurrencies, and cloud data, did not exist.
Due to this vacuum in law, executors often face hurdles while trying to trace an online account, obtain account passcodes/passphrases for accessing the account of a deceased user and get assistance from service providers (especially overseas ones). Privacy law also poses yet another challenge:technology firms are increasingly resistant to providing account information and data on users and deceased account holders without statutory mandates and judicial intervention. Such behaviour has been defended on privacy and safety grounds but it can also make accessing legally permissible but “sensitive” information unavailable for distribution.
Hence while the existing laws for cross border succession are still useful they desperately need an update to reflect technological change. The absence of legislation, meanwhile, necessitates that Courts will resolve cases on individual basis leading to inconsistent outcomes.
Suggestions and Reforms
Several measures could be enacted to provide more certainty to cross-border successions. India could consider enacting detailed laws on digital assets that explicitly recognise them as a category of property that can be inherited, stipulating different classes of digital assets, as well as rules about their detection, valuation and disposal. Parliament may consider legislating on the law applicable to cross-border digital successions.
Using a connecting factor such as the deceased’s ordinary residence or domicile at the time of her death may minimize jurisdictional uncertainty and the chances of conflicting decisions in different forums.
Succession laws ought to accommodate digital will and electronic estate-planning, provided mechanisms exist to secure the originality of such wills and to guard them against malpractice or fraud. Digital succession policies of financial institutions, cryptocurrency exchanges and online digital platform providers could be developed to facilitate a deceased customer’s assets to be transmitted to their executors or heirs on the production of legitimate records. Greater mutual assistance with foreign countries should facilitate an equitable administration and distribution of the relevant assets and reduce the likely incidence of multiple proceedings in more than one jurisdiction. Such reform would allow Indian succession laws to align better with the 21st century digitalised environment.
Illustration 1: Understanding Cross-Border Succession
Situation:
Mr. A, an Indian citizen, permanently settles in Canada. During his lifetime, he owns:
A residential house in Lucknow (India);
A commercial office in Toronto (Canada); and
Cryptocurrency worth ₹30 lakh in an online digital wallet.
After his death, his children claim ownership of all these assets.
Applicable Law:
House in Lucknow: Indian law will apply because the property is situated in India (lex situs principle).
Office in Toronto: Canadian law will apply because the property is situated in Canada.
Cryptocurrency: There is no universally accepted rule. The applicable law may depend on the deceased’s domicile, the law governing the cryptocurrency exchange, and the terms of the service provider.
Explanation:
This example demonstrates that a single estate may be governed by different legal systems depending on the nature and location of each asset.
Illustration 2: Succession to Immovable Property
Situation:
Mrs. B, an Indian citizen residing in Australia, owns agricultural land in Punjab. She executes a will in Australia and later dies.
Applicable Law:
Although the will was executed in Australia, the succession to the agricultural land in Punjab will ordinarily be governed by Indian law, since immovable property is governed by the law of the place where the property is situated (lex situs).
Explanation:
The location of the land is more important than the nationality or residence of the owner when determining succession to immovable property.
Illustration 3: Succession to Digital Assets
Situation:
Mr. C lives in Mumbai and owns:
Bitcoin through a Singapore-based cryptocurrency exchange;
A PayPal account registered in the United States; and
A Google Drive account containing valuable business documents.
After his death, his legal heirs seek access to these digital assets.
Applicable Law:
Unlike immovable property, no single rule determines the applicable law. The court may consider:
The deceased’s domicile;
The jurisdiction chosen in the service provider’s terms and conditions;
The country where the service provider is incorporated; and
The relevant domestic succession laws.
Explanation:
This illustrates why digital assets create greater legal uncertainty than traditional property.
Illustration 4: Recognition of Foreign Probate
Situation:
An Indian citizen living in England obtains probate from an English court. The deceased also owned a house in Jaipur.
Applicable Law:
The English probate order may not automatically transfer ownership of the Jaipur property. Indian courts may examine the foreign probate before recognising it in accordance with Indian law.
Explanation:
Foreign succession orders often require recognition under Indian legal principles before they can affect immovable property located in India.
Illustration 5: Why Determining Applicable Law Matters
Situation:
A businessman is domiciled in Singapore but owns:
A farmhouse in India;
An apartment in Dubai;
Shares in a U.S. company;
Cryptocurrency stored on a global blockchain platform.
After his death, disputes arose among his legal heirs.
Applicable Law:
Farmhouse: Indian law.
Apartment: UAE law.
Shares: Usually governed by the law applicable to movable property, depending on the relevant connecting factor and company rules.
Cryptocurrency: No universally accepted rule; the applicable law depends on the facts, including domicile, contractual terms, and the governing legal framework.
Explanation:
This example shows that one person’s estate may be governed by multiple legal systems, making cross-border succession one of the most complex areas of private international law.
Conclusion
The increasing interconnectedness of the world through international migration, foreign investment, and modern technologies have transformed the law of succession and inheritance. Though rules like ‘lex situs’ still render certainty when dealing with land interests; they are not sufficient while governing digital assets that span across countries. The lack of a robust legal regime governing cryptocurrency, digital accounts, digital wallets, and other virtual assets have left the courts, executors and heirs in a quagmire.
Though a strong foundation for the inheritance of movable property has been provided through existing succession laws in India, clear guiding principles in relation to the handling of succession of foreign digital wealth have not yet been evolved. As wealth in digital assets continues to grow substantially, legislative intervention is indispensable. Modern legislative frameworks that recognize digital assets and offer clear conflict-of-law principles are required which will minimize future litigation and legal complexities as there are no clearly established provisions in the contemporary legal system which governs the succession of digital assets which is a major challenge. Although, reforms might be slow, enacting a progressive succession law framework in India will have a far-reaching effect and cater to every form of property (traditional and virtual) in the globalized and technically driven world.
References
Statutes
- The Indian Succession Act, 1925.
- The Transfer of Property Act, 1882.
- The Registration Act, 1908.
- The Code of Civil Procedure, 1908.
- Regulation (EU) No. 650/2012 of the European Parliament and of the Council (European Union Succession Regulation).
- Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), United States.
Cases
- Satya v. Teja Singh, (1975) 1 SCC 120.
- Y. Narasimha Rao v. Y. Venkata Lakshmi, (1991) 3 SCC 451.
Books
- Dicey, Morris & Collins, The Conflict of Laws (16th ed., Sweet & Maxwell).
- Cheshire, North & Fawcett, Private International Law (Oxford University Press).
- Paras Diwan, Private International Law (Allahabad Law Agency).
- Mulla, The Indian Succession Act (LexisNexis).
Journal Articles
- Journal of Private International Law.
- Indian Journal of International Law.
- International & Comparative Law Quarterly.
- NUJS Law Review (selected articles on private international law and digital assets).
Web Sources
- Ministry of Law and Justice, Government of India.
- India Code Portal.
- European Commission – EU Succession Regulation.
- UNCITRAL Publications on Cross-Border Legal Cooperation.
- WIPO – Digital Assets and Intellectual Property Resources.
Bluebook Citations
- The Indian Succession Act, No. 39 of 1925, Acts of Parliament, 1925 (India).
- The Transfer of Property Act, No. 4 of 1882, Acts of Parliament, 1882 (India).
- Satya v. Teja Singh, (1975) 1 S.C.C. 120 (India).
- Y. Narasimha Rao v. Y. Venkata Lakshmi, (1991) 3 S.C.C. 451 (India).
- Regulation (EU) No. 650/2012 of the European Parliament and of the Council, 2012 O.J. (L 201) 107.
- Revised Uniform Fiduciary Access to Digital Assets Act (Unif. L. Comm’n 2015).
