Inheritance of Property Across Europe Update

The new EU succession regulation will soon be in force.

As from the 17th August 2015 the answer to the question about jurisdiction and the applicable law on the point of succession should be found in the Regulation No.650/2012 of the European Parliament and of the Council of 4th July 2012.

Save for the UK, Ireland and Denmark (which are treated as a Third State) the rest of EU countries (Member States) will apply the new harmonised succession’s regulation in all cases where a death takes place on or after the 17th August 2015.

The new regulation follows the idea that one law and one procedure should be applicable to the estate recognized as a whole.

It should be underlined that the new regulation consists of the set of rules concerning the matter of conflict of laws (i.e. which country’s domestic law will be the applicable law).

Under the new regulation there are two main rules determining the applicable law.

First, what was the habitual residence of the deceased at the moment of death and the second what applicable law has been chosen by the deceased (in the Will).

What does it mean that the habitual residence indicates the law?

The term “habitual residence” is not defined in the new regulation. Nevertheless, for the purpose of it the term should be understood as the place where all circumstances of life of the deceased during the years preceding his death and at the time of his death are located and to which the deceased is closely connected.

To simplify the explanation, we can understand the habitual residence as a centre of the deceased’s life and activities at the time of death.

As an example, if the deceased had at the moment of death the habitual residence in France, the French succession regulation will govern the matter of succession, regardless of the location of the estate even if it includes a real property.

What is the choice of applicable law?

Whenever the deceased chooses the applicable law in the Will, it means that succession will be governed by that law, no matter of his or her habitual residence or “closer connections” clause, or even location of real property, provided that the choice is legally valid.

There are several conditions for such choice:

• it may be done among the law of the State whose nationality he possess (in case of multiple nationalities the choice may be done among law of any of the States whose nationality he possesses) at the time of making the choice or at the time of death;
• the choice has to be done expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated of the terms of such disposition.

What is the scope of the new regulation?

The scope covers mainly the following matters:

• the causes, time and place of the opening the succession;
• the capacity to inherit;
• disinheritance and disqualification by conduct;
• the transfer to the heirs and, as the case may be, to the legatees of the assets, rights and obligations forming part of the estate, including the conditions and effects of the acceptance or waiver of the succession or of a legacy;
• the liability for the debts under the succession;
• the division of the estate.

What about the validity of the Wills – especially those concerning real properties ?

There is no need to worry because the new regulation does not bring changes in this matter, maybe with one exception.

The new regulation is applied to the substantive validity of the Will, but only when we talk about indication of the applicable law. The possible conditions concerning this validity of the Will, e.g. whether the deceased can dispose either, a part of his estate or the whole of the estate in the Will, are the matter of the domestic regulations.

On the other hand, the question about the proper expression of the deceased’s last Will to keep it valid – oral or written, the number of witnesses, is not in fact the matter of this act. It is a problem of domestic law and regulations concerning succession and the issue of the technical (formal) validity of the Will.

As an example, when the deceased chooses the applicable law or it will be indicated by the habitual residence when it comes to the formal validity (but also in connection with the applicable law), although the new regulation concerns this matter, the EU countries (the Member States) - which in the date of adoption of the new regulation are contracting parties of the Hague Convention on the conflicts of laws relating to the form of testamentary dispositions dated 5 October 1961 - still apply this act (and indications mentioned there) and not the new regulation.

For the future, the new regulation uses similar indications as the Hague Convention to show the applicable law for the technical side of the Will, so there should not be any surprises for the future Member States.

What about the relation between the new regulation and other multilateral or bilateral agreements?

They are still in power provided that the following conditions are met:

• the agreement has to cover the matter governed by the new regulation;
• the EU countries (Member States) have to be the contracting party of such agreements;
• according to the Article 75 paragraph 2 of the new regulation, the agreement takes the precedence over the new regulation if is concluded not only between Member States.

What if the new regulation indicates as an applicable law the law of the Third State (the non-Member State)?

In that case, the indication concerns not only the domestic law of that country but also the rules of its private international law and in that case one has to remember about the renvoi.

Renvoi is the legal doctrine that applies when there is a conflict of laws in a particular court case. Renvoi appears when the conflict of laws rules of the country where the action is brought indicate as an applicable law the regulations of the other country, but the private international law rules of that country indicate as an applicable law the regulations of the former country (the country where the action is brought) (remission, renvoi au premier degré) or another country (transmission, renvoi au second degré).

As a result of renvoi we can return to the law of the Member State (the former one or different) and then the judge will apply the law of that Member State on the other hand it can also indicate the law of the Third States which will apply its own regulation, it means that the renvoi is accepted and we do not have further indications.

To avoid multiple returns and well known problems with the renvoi it became limited but also excluded in the following situations:

• when the applicable law was chosen under the rules of Article 22 of the new regulation;
• when the applicable law is indicated under the closer connection clause.