It’s  complicated

It’s  complicated

The nature of the structure of a family has changed dramatically even since the birth of STEP in 1991, with the ‘traditional’ family of a married heterosexual couple and their biological children evolving to take into account questions of sexuality, divorce and remarriage, adoption, cohabitation and civil partnerships, multi‑ethnicity families, multi‑jurisdictional families and so on.

Although society may be keeping up with the changing definitions, for legal practice and legislation it is not so easy. The STEP report Meeting the Needs of Modern Families (the Modern Families report),[1] sponsored by TMF Group and released in November 2021, called on practitioners and legislators to adapt and modernise in order to support the needs of all family structures.

‘The make‑up of many modern families is increasingly complex, and while it has always been risky to follow a one‑size‑fits‑all approach when advising families, this is more the case now than ever before,’ says Charlie Tee TEP,[2] Chair of the STEP Modern Families Thought Leadership Steering Group. ‘One of the key issues for practitioners is to ensure that they fully understand the nature and relationships within the family they are advising and that need to be reflected in their estate planning and succession planning. It is up to the practitioner to help them navigate these inherent complexities to arrive at the most suitable structure or planning for each individual family.’

Marriage and children

The complexity for practitioners internationally, especially those operating cross‑border, is not limited to the structure of individual families. They must also take into account the different paces of change happening globally. Tee points to the notable example of same‑sex marriage, legalised in numerous jurisdictions but not recognised in some and even criminalised in others.[3]

‘It is of fundamental importance to understand that there are a lot of cultural, religious and social differences underpinning these differences between jurisdictions,’ he says. ‘What is considered acceptable in some jurisdictions is completely unacceptable elsewhere.’

In September 2021, the European Parliament adopted a resolution on the rights of LGBTIQ persons in the EU, emphasising that these citizens should be able to fully exercise their rights, including that of free movement, everywhere in the EU. The resolution states that marriages or registered partnerships formed in one EU Member State should be recognised in all Member States in a uniform way and that same‑sex spouses and partners should be treated the same as their opposite‑sex counterparts.

Luigi Belluzzo TEP,[4] Deputy Chair of the STEP Europe Regional Committee, comments that the resolution moves to ‘remove all obstacles that LGBT people are still forced to face in exercising their fundamental rights’, especially in regards to the differing regulations across Member States. ‘These divergent legal statuses have implications for partners belonging to two Member States who want to formalise or legalise their relationship, or for same‑sex couples and their families wishing to move to another Member State,’ he explains. ‘When marital status and family law are involved, different traditions and cultures emerge among Member States. An “EU‑wide position” has not therefore been possible as it is necessary for practitioners to verify the laws in each involved jurisdiction.’

As well as seeking uniform cross‑territory treatment for couples, the EU resolution also examines the treatment of children. It urges Member States to accept the adults mentioned in a child’s birth certificate as their legal parents, while MEPs have argued that ‘rainbow families’ should have the same right to family reunification as opposite‑sex couples and their families to ensure that children do not become stateless if they move between Member States.

The Modern Families report notes the increased number of both blended families and the number of children being born with scientific assistance. ‘This is certainly putting a strain on the definition of children as a matter of law in many jurisdictions,’ says Tee. ‘Again, the legal position in respect of such families varies enormously from jurisdiction to jurisdiction.’

Family splits

While the EU seeks to navigate a more unified path, the UK’s exit from the union has repercussions for family law – especially for families with cross‑border issues.

‘Brexit will have repercussions on all aspects related to a couple, only one of which is divorce,’ warns Belluzzo. ‘Rights arising from a marriage, civil partnership or registered partnership in a particular EU Member State can be very different. Rights of registered partners concerning minor adoption, property regimes and maintenance are not applied in the same way in all EU Member States. Each situation should be analysed on a case‑by‑case approach.’

The EU and the UK have indicated that divorces started before 31 December 2020 will be mutually recognised; however, if UK divorce proceedings started on or after 1 January 2021, then some Member States may not recognise the divorce and each case will be subject to legal verification for certainty on its status.

Moreover, there are now divisions within the UK itself, with Scotland having revoked Council Regulation (EC) No 2201/2003 (Brussels IIa), which harmonises rules within the EU and the UK, and England and Wales having largely retained it. Scotland has now reverted to its pre‑Brussels IIa position, under which the Scottish courts had jurisdiction to deal with a divorce if either of the parties was domiciled in Scotland on the date when the action was begun or was habitually resident there for the period of one year prior to that date. The differences between England and Wales, Scotland and Member States could well see practitioners working on lengthy cases dealing with forums.

On the other side of the world, however, divorce cases are becoming more streamlined: an ordinance introducing mutual recognition of matrimonial and family judgments between mainland China and Hong Kong comes into operation on 15 February 2022.

Hong Kong’s Mainland Judgments in Matrimonial and Family Cases (Reciprocal Recognition and Enforcement) Ordinance (the Ordinance) provides that the Hong Kong District Court will recognise a divorce specified in a valid mainland China divorce certificate and can enforce mainland Chinese judgments given in matrimonial or family cases relating to care, status or maintenance. Further, Hong Kong divorce decrees, family judgments or orders for maintenance, custody or wardship of a child can be subject to an application for recognition and enforcement in mainland China.

‘The Ordinance substantially changes the status quo,’ says STEP China Branch Officer Jane Ren TEP.[5] ‘The number of marriages involving the two jurisdictions is increasing every year and we can now effectively avoid re‑litigation of the same disputes in both jurisdictions.’

Although practitioners welcome the change, it will also mean significant adjustments to the way they work. ‘Clients in cases involving the two places will expect practitioners to take this mechanism into account when advising on dispute resolution in terms of governing law and jurisdiction,’ comments Ren. ‘Advisors in both mainland China and Hong Kong will be encouraged to learn more about the other place’s relevant law and practice and will be eager to deepen their collaborations in cross‑border matrimonial and family cases.’

Alfred Ip TEP,[6] member of STEP’s Contentious Trusts and Estates and Cross‑Border Estates Special Interest Groups, believes that the Ordinance will aid Hong Kong in family law litigation, although he goes a step further: ‘The recognition of a Hong Kong judgment in China would certainly make Hong Kong a more desirable jurisdiction for matrimonial matters in future. Same‑sex marriage is not recognised under Hong Kong laws and the parties in same‑sex marriages are therefore not protected under Hong Kong laws. The next step should be for Hong Kong to accept petitions for the divorce of same‑sex couples.’

Future planning

Like Ren, Ip points to the fact that any changes to legislation will be accompanied by a need for practitioners to evolve and continuously learn. Much of legislators’ discussion around the needs of modern families has centred on marriage, divorce and children; however, estate planning for ‘non‑traditional families’ is an area that also needs attention.

‘An area that is ripe for reform in a number of jurisdictions across the world is how cohabitants or long‑term unmarried partners (of all sexes) are treated and the rights they have or do not have following their partner’s death,’ remarks Tee. ‘While marriage remains popular, there is a large proportion of couples who are not married but who very much represent a family and, at the moment, they are not particularly well served by legislation in many countries in the world. If steps can be taken to improve their lot in many jurisdictions, then this clearly will be a boon for many “non‑traditional” families. If the cohabitation issues can be resolved, then I think this will go a long way towards helping more people than any other immediate change.’

 

Meeting the Needs of Modern Families

To gather insight about the families that STEP members advise and what their wealth and succession planning needs are, STEP undertook a research project. The aim was to understand and highlight the common themes facing families in this area and where STEP can focus its future work to address any issues identified. The resulting report, Meeting the Needs of Modern Families, sponsored by TMF Group, highlights the need for advisors and legislators to adapt and modernise in order to keep up with the needs of today’s families. It identifies the key complexities and constraints currently facing families and their advisors.

To find out more about the findings of the report, its methodology and respondents by profession, location and their clients’ location, visit bit.ly/modern_families


[2] Charlie Tee TEP is Partner in the Wealth Planning & Tax Team at Withersworldwide.

[3] For further reading on LGBT+ rights across the globe, see James Quarmby TEP, ‘The Laws of Love’, STEP Journal (Vol 28 Iss2), pp.65–67

[4] Luigi Belluzzo TEP is Founding Partner of Belluzzo International Partners.

[5] Jane Ren TEP is Partner at Fangda Partners.

[6] Alfred Ip TEP is Partner at Hugill & Ip Solicitors.