This article explores how the Succession Regulation imposes one law to a succession involving an estate in Italy.
The death of a person resident in a Member State leaving assets and heirs in more than one country, or with a nationality different from the place of residence, would have caused
a headache for the Executors, given the conflict of laws between different states.
This is frequently the case where a succession involves assets in the UK and Italy, as Italian and English law are based on completely different principles.
Italian succession law follows the doctrine of “universality of the succession“, in that a person has the right to have his estate dealt with under one single law. English law on the other hand will apply different rules to immoveable property (houses, land) which will be dealt with under the law of the place the property is situated and moveable property (bank accounts, shares, paintings), which will be governed by the law of the person’s domicile. This is known as the principle of “scission“.
Furthermore, Italian law has a system of “forced heirship”, in that it reserves a right to a portion of the deceased’s estate to certain relatives (spouse and children) which overrides a will. On the other hand, English law (and most common law based systems) allows complete freedom in the dispositions made in a will, so a testator could choose to leave an estate to only one of his family members, or none, and this could only be challenged by a person who is financially dependent on the testator.
The aim of the Succession Regulation was to harmonise and resolve conflict of laws such as these throughout Europe, however from its entry into force it will not be applicable in the UK, Ireland or in Denmark.
What is the meaning of “succession”
According to the Regulation the term “succession” is defined as:
“succession to the estate of a deceased person and covers 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;” (Art. 3 (1) (a))
How will the new EU Succession Regulation deal with these types of conflict?
Given that the UK has chosen not to opt in to the Regulation, at least for the moment, the Regulation does not bring complete clarity to the succession of a British citizen with assets abroad or who is resident abroad but leaves assets in the UK. The conflict of law still exists, because English law could still hold two different different rules applicable to assets depending on whether they are immoveable or moveable.
How will the law which is applicable to a succession be decided?
“1. Unless otherwise provided for in this Regulation, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.
2. Where, by way of exception, it is clear from all the circumstances of the case that, at the time of death, the deceased was manifestly more closely connected with a State other than the State whose law would be applicable under paragraph 1, the law applicable to the succession shall be the law of that other State.” (Art. 20)
The law applicable to a succession will therefore by default be the law of the place of residence of the deceased. This will apply even where the place of habitual residence is outside the EU, so the Regulation could be applied worldwide.
Which is the place of habitual residence?
It may not always be clear which is the country of “habitual residence”, but the preamble to the Regulation does give some guidance:
“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. ” (Preamble – para 23)
Choice of law
To avoid the application of the law of habitual residence, a testator does have a choice to decide to apply his own national law to his future succession, by making a declaration in a will:
“1. A person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death. A person possessing multiple nationalities may choose the law of any of the States whose nationality he possesses at the time of making the choice or at the time of death.” (Art. 22)
In future articles on this subject we will set out some case studies to show how the new rules might apply to a succession which involves a British or non-EU citizen, and how the Regulation might apply to their whole estate, or only to their Italian assets.