The European Parliament and the Council of the European Union have passed a regulation which aims at simplifying inheritance settlement and avoiding disputes when the will of a deceased involves the legal systems of more than one Member State. Under the new rules, the succession to a deceased person will be dealt with as a whole, wherever the assets are.
The regulation will apply from 17 August, except for Articles and 77 and 78, which will apply from 16 November 2014, and Articles 79, 80 and 81, which will apply from 5 July 2012. Denmark, which has opted out of EU justice and home affairs matters, will not be involved. Neither will Britain and Ireland, who also decided to opt out of the scheme.
OF TWO NEW RULES
Currently heirs and legatees to the around 450,000 cross-border successions each year are faced with complex legal issues involving judicial systems in several states. According to Kurt Lechner (EPP, DE), who steered the proposal through Parliament, cross-border inheritances make up 10% of all successions in the EU, involving some €123 billion. The Lechner report was passed with 589 votes in favour, 21 against and 79 abstentions.
The new regulation introduces two new principles for dealing
with international successions.
First, if someone dies in a Member State that is not their home
country, their succession will generally be dealt with under the
law of the Member State where they last had their place of
"habitual residence", by the courts and authorities of
that Member State. This will avoid conflicts that could otherwise
arise if several courts in different Member States declared
themselves competent. "Residence" will be a matter of
facts, and does not mean "domicile".
In addition, a single competent authority will have
jurisdiction, that of the deceased's habitual residence. As an
exception to this, competence may be given to the authorities of
the country where the property is located if that is necessary for
the transfer of the property and its recording in the land
registers.
Currently, an estate can be subject to a number of laws depending
on the location and type of the asset involved. For instance, many
European state rules of Private International Law distinguish
between immoveable and moveable assets. The law of the country
where the real estate is situated applies to the real estate
involved. However, bank accounts, investments, shares, etc., are
subject to the law of the deceased's domicile. Therefore, a
conflict of laws arises when a person is deemed to be domiciled in
two countries, making it difficult to plan ahead or settle
cross-border estates.
Second, the person drawing up a will also has the option of having
his or her will read under the law of his or her Member State of
origin. This will give EU citizens in general a new right, which is
believed to be a major improvement, as it will allow anyone living
abroad within the EU to retain close links with their home country
and ensure that specific national provisions, such as rules
governing gifts made during a lifetime, are respected.
Indeed, the regulation will enable people to choose in their Will
to have the law of their native state applied to the whole of their
estate. The choice of law cannot be implied. An express
provision of this must therefore be drafted in the Will. . An
option of applicable law is not new to a Finnish citizen, who has
been able to choose applicable law under the Finnish Code of
Inheritance 40/1965. In fact, a Finnish citizen's options are
reduced considerably by this
regulation.
EUROPEAN CERTIFICATE OF SUCCESSION
The Regulation also introduces a European Certificate of
Succession, which will constitute proof of the capacity of the heir
or legatee and of the powers of the executors of wills or
third-party administrators. This certificate will be issued by the
competent authority upon application of any heir, beneficiary,
devisee, legatee, executor or third-party, using swifter and
cheaper procedures, i.e. an application form that can be easily
translated into any language within the European Union. Use of this
certificate will not be mandatory.
In practice this means that within one estate there might be many
different certificates proving different kinds of capacities. The
practical effects of the European Certificate of Succession are to
be determined in the future. It is believed that this will
represent a major improvement on the present situation, where
people sometimes have difficulty exercising their rights. The
European Certificate of Succession will not apply to tax
issues.
The use of the Certificate will not be a substitute for internal
procedures. However, the effects of the Certificate will also be
recognized in the Member State whose authorities have issued it.
Most likely the competent authorities in Finland will be the
district courts.
NO IMPACT ON NATIONAL LAW
The new regulation will not affect the situation of people who remain resident in their home country. It will not change national laws governing succession, property, or tax arrangement and it will not introduce any harmonization of national laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.