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The applicable law to cross-border successions under Regulation (EU) 650/2012

Iason Skouzos & Partners > Practice Areas  > Civil Law  > The applicable law to cross-border successions under Regulation (EU) 650/2012

The applicable law to cross-border successions under Regulation (EU) 650/2012

Regulation (EU) 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession, was entered into force on the 17th of August 2015.

It is worth mentioning that as part of European Law, Regulation 650/2012 (“the Succession Regulation”) enjoys priority above provisions of national law dealing with issues of cross-border succession. Therefore, when examining the various issues that may arise in the framework of a cross-border examination, no reference may be made to the national rules.

The application of the Succession Regulation requires that a succession presents a cross-border dimension. A cross-border dimension could be presented in various cases, such as for example when the deceased had another nationality than the nationality of the State in which e habitually resided, when the deceased possessed assets in another State than the State in which he habitually resided or when some of the heirs or other beneficiaries of the succession are established in another State than the State in which the deceased habitually resided.

The scope of the Regulation 650/2012 includes all civil-law aspects of succession to the estate of a deceased person, namely all forms of transfer of assets, rights and obligations by reason of death, whether by way of a voluntary transfer under a disposition of property upon death or a transfer through intestate succession. Tax issues related to the succession of a person are excluded from the scope of application of the Regulation. However, the Regulation could have an impact on the tax treatment of a cross-border succession.

In order for the Regulation to apply, the rules of jurisdiction as described under Articles 4 – 10 of the Regulation must be taken into account. As soon as the authorities of one Member State have jurisdiction, the Regulation applies. The application of the Regulation is not reserved to the succession of nationals of a Member State. Likewise, the Regulation may be applied even if the succession includes assets located in third States.

As for the temporal scope of the application, it is noted that according to Article 83, the Regulation applies to the succession of persons who died on or after the 17th of August 2015.

According to Regulation 650/2012 (Article 4), the basic principle is that jurisdiction goes to the courts of the Member State where the deceased habitually resided before his death, whereas according to Article 21, the general rule is that the law, which is applicable to succession, is the law of the Member State in which the deceased had his habitual residence at the time of his death. Thus, for example, if a Greek who lived in Italy since 2000, where he also worked, with assets both in Italy and Greece, died after the 17th of August 2015, the succession to his entire inheritance will be determined by the provisions of the Italian law. In this case, the Italian law is the applicable one, because the habitual residence of the deceased at the time of his death was in Italy.

Recital 23 and 24 of the Regulation provide some guidance on the concept of the “habitual residence” of the deceased. Particularly, in order to determine the habitual residence, the authority dealing with the succession should make an overall assessment of the circumstances of the life of the deceased during the years preceding his death and at the time of his death, taking account of all relevant factual elements, in particular the duration and regularity of the deceased’s presence in the State concerned and the conditions and reasons for that presence. The habitual residence thus determined should reveal a close and stable connection with the State concerned taking into account the specific aims of the Regulation. In certain cases, determining the deceased’s habitual residence may prove complex. Such a case may arise, in particular, where the deceased for professional or economic reasons had gone to live abroad to work there, sometimes for a long time, but had maintained a close and stable connection with his State of origin. In such a case, the deceased could, depending on the circumstances of the case, be considered still to have his habitual residence in his State of origin in which the centre of interests of his family and his social life was located. Other complex cases may arise where the deceased lived in several States alternately or travelled from one State to another without settling permanently in any of them. If the deceased was a national of one of those States or had all his main assets in one of those States, his nationality or the location of those assets could be a special factor in the overall assessment of all the factual circumstances.

It is crucial to point out that the Regulation has a universal application, since according to Article 20 “Any law specified by this Regulation shall be applied whether or not it is the law of a Member State”.

Furthermore, Article 34 deals with the implementation of renvoi. Specifically, according to Recital 57 “The conflict-of-laws rules laid down in this Regulation may lead to the application of the law of a third State. In such cases regard should be had to the private international law rules of that State. If those rules provide for renvoi either to the law of a Member State or to the law of a third State which would apply its own law to the succession, such renvoi should be accepted in order to ensure international consistency. Renvoi should, however, be excluded in situations where the deceased had made a choice of law in favour of the law of a third State”.

It is also worth mentioning that Article 35 of the Regulation states that “The application of a provision of the law of any State specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum”. One of the most basic issues, which raises the question of whether there is an opposition to public policy (ordre public), is that of the “reserved share” principle. The heirs whose rights are affected by the law applicable to inheritance relations (be it chosen by the heir or not) will most probably be relied upon to defend their rights in Article 35.

Last but not least, the Regulation allows parties to make a choice of law. This means that one may decide to submit his/her succession to the law of his/her nationality (Article 22). As also stated under Recital 38, the possibility to choose the law makes it possible for citizens to organize their succession in advance. The choice of law can only be made in favour of the law of the nationality of the person making the choice. This limitation is justified (recital 38) in order to ensure a connection between the deceased and the law chosen and to avoid a law being chosen with the intention of frustrating the legitimate expectations of persons entitled to a reserved share.

Taking all the above into consideration, a number of examples is presented as follows:

  1. An English national which is a London resident, dies in 2016 and possesses movable and immovable property in the UK, Germany and Italy. According to the Succession Regulation, the law of the habitual residence of the deceased at the time of his death is the applicable one to the succession as a whole, which in this case is the English law. According to the English Private International law rules, the English law is applicable to the movable property (wherever it is) and to the immovable property that is located in the UK, the German law is applicable to the immovable property that is located in Germany and the Italian law applicable to the immovable property that is located in Italy. In other words, in this case three different laws will be applicable to the succession.
  2. An American national, which resides in New York, dies and leaves movable and immovable property in the USA and in Greece. In her will, she specified that the law which will be applicable to the succession is the law of the United States. The renvoi from the US law to the Greek Law (as to the assets in Greece) cannot be acceptable due to the existing choice of law by the deceased. The law of the United States will govern the succession as a whole.
  3. An Austrian national which resides in Senegal dies in 2016 and possesses movable and immovable property in Senegal, France and Romania. According to the Succession Regulation, the law of the habitual residence of the deceased at the time of his death is the applicable one to the succession as a whole, which in this case is the law of Senegal. According to the private international rules of Senegal, the applicable law is the law of the nationality of the deceased. In this case the renvoi to the Austrian law is acceptable, if no issue is raised in accordance with article 34 par. 2 (which refers to the exceptions as to renvoi such as deceased was manifestly more closely connected with a State, choice of law etc.)