BAHAMAS Law and Practice Contributed by: Sharmon Y. Ingraham, Higgs & Johnson
1. Contemporary Cultural Considerations in Succession Planning 1.1 Social and Cultural Attitudes Succession planning in The Bahamas is significantly influenced by a desire to ensure family wealth cre- ated by earlier generations is sustained and used to maintain successive descendants. The current fam- ily representatives who are growing and maintaining family businesses are also focused on ensuring the businesses are retained by and transferred to lineal descendants. Younger clients are also focused on charitable ven- tures to extend international opportunities to local recipients, introducing exciting and innovative pros- pects for engagement and development. 1.2 Wealth Profiles and Industry Influences There is a well-established second home sector in The Bahamas, which has in recent times influenced local wealth planning and client expectations in the jurisdic- tion as well as the more traditional low-tax aspects for international planning. Statutory provisions in The Bahamas that relate to the law of succession do not define “domicile” or pro- vide legislative guidance concerning any standards for determining domicile. However, in the matters before it (eg, Masselle v Masselle [1994] BHS J. No 104 and Kohlrautz v Kohlrautz [1999] BHS J. 104), the Bahamian Supreme Court has considered the issue of domicile. The court, relying upon English case law, has determined that domicile is established by refer- ence to the intention of a person to permanently reside in The Bahamas. Such intention to reside is assessed having regard to the expression of the intent of the person and the factual matrix regarding the place where they are ordinarily resident. The Bahamian court also takes into consideration any formal immigration status obtained by a person from the Department of Immigration in The Bahamas in its assessment. 2. Residency and Domicile for Purposes of Wealth and Estate Planning 2.1 Determining Domicile
Irrespective of the residence or domicile of persons, the statutory right of a person to make a will governed by the law of The Bahamas does not arise from the domicile of such person. Specifically, Section 7 of the Wills Act, Chapter 115, Statute Law of The Bahamas, permits testators domiciled outside The Bahamas to make valid wills governed by the law of The Bahamas where such testator has assets within The Bahamas. Additionally, the Bahamian court has recognised the intention and wishes of testators concerning move- able property while acknowledging that the disposi- tion of real property is subject to the law of the place where such property is situated. Accordingly, a deter- mination of Bahamian domicile of a testator would support the application of Bahamian law to the move- able property contained in the worldwide estate but is not a precondition to the valid creation of a will governed by the law of The Bahamas. The residency and domicile of a person do not give rise to any estate, death or inheritance tax assessment in, or payable to, The Bahamas as, in the current tax system in the jurisdiction, such taxes are inapplicable. Taxation in The Bahamas arises through the imposi- tion of stamp, customs and excise duties, real prop- erty taxes and value added taxes. The domicile or residency of a person does not restrict such person’s entitlement to inherit or obtain any share of an estate in The Bahamas of a deceased person. Where an entitlement to inherit arises through a valid will, the law of The Bahamas does not prevent such disposition. To the extent the entitlement arises in an intestate estate, the recipient beneficiary would be required to fall within one of the categories estab- lished under Section 4 of the Inheritance Act, Chapter 116, Statute Law of The Bahamas. A person’s domicile or residency is a statutory require- ment to permit an application under the provisions of the Matrimonial Causes Act, Chapter 125, Statute Law of The Bahamas. 2.2 Income Tax Residency Income tax does not form a part of the current system of taxation utilised in The Bahamas. Consequently, there are at present no rules and standards regarding
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