Major changes in the European Rules of Succession

Historically, most people have chosen their place of birth as a place live and to die. However, in recent years we have witnessed massive migration within Europe of who choose a different country as a place to live out their days in happiness and bright sunshine . The number the Europeans who live in another country in Europe increased by a third between 2005 and 2010. In some cases for work and in others to the search for a better climate or a better life for their retirement. Currently 450,000 Europeans have made Wills in a country different to that of their birth, with assets totaling a massive 125,000 million euros.

 

In Europe the laws of succession derive from from the Napoleonic era the nationality as "vis attractiva" in reference to the applicable legislation. This has caused many legal disputes about the succession of people who die in outside of their own country.

In Spain this issue has been solved with the repeal of Article 9 of the Civil Code that established that the succession was governed ""by national law of the deceased at the time of his death, whatever the nature of the goods and the country where they are"

This provision, which could have had some sense when these situations were not common, was condemned by the eternal judicial processes. A process that entailed huge costs for the heirs, who watched their inheritance wither away. In many cases National legislation even included laws of third countries, in what is known as forwarding clauses that made the handling of inheritances extraordinarily difficult.

 The Legal costs of Probate, and the time taken to grant it, increased worryingly , which is why , after twelve years of negotiations, the EU Regulation 650/2012 which entered into force on August 17 was approved. Virtually all the countries of the European Union implemented the regulation, since then the habitual residence of the deceased is “vis attractiva” and not their nationality, which indeed solves many of the cost issues, but you can also have some problems in its implementation. For example, it is very common that the British will retire in Spain. Until now, Spain applied the national law of the deceased, which ensured that no British citizen was subject to forced Inheritance. 

However, from now on, when a British citizen dies intestate, his estate will be obliged to pay a third of his inheritance to their children or legitimate heirs, in spite of this not being the law, or the custom in the United Kingdom. This Law can collide head on with the Will made in a home country, since Article 27 of the Regulation establishes requirements for the Validity of Wills, including in the case of the immovable property. Although the current thinking is that in The United Kingdom, who did not sign up, the old rules will apply , but there can be instances where it does not. It is for this reason that all those who wish to plan their succession must ensure that they look at the matter in depth to ensure their wishes are carried out.

The EU predicted this with, article 30, which relates to the special provisions that impose restrictions on rules applicable to the succession of certain property:

 " Where the law of the State in which certain immovable property, certain enterprises or other special categories of assets are located contains special rules which, for economic, family or social considerations, impose restrictions concerning or affecting the succession in respect of those assets, those special rules shall apply to the succession in so far as, under the law of that State, they are applicable irrespective of the law applicable to the succession. "

The regulation states that the general jurisdiction for probate where the laws of the country have special rules, for example forced heirship, and do not recognize the regulation, has to be the residence of the testator. However there are some circumstance where the competent national court is that of the deceased, where for example the event that the goods are in that State, even though the owner is resident in a third country or there has been than five years since the change in the habitual residence.

The regulation also lays down the foundations for quick and effective procedure for the grant of probate in a third country but in a precautionary fashion allowing for the payment of the required rates or taxes in that country. It clarifies the applicable law, procedure and implementation, adopting a European certificate to ensure legal certainty to the administration of the estate of the deceased person, even where there are pending proceedings.

In conclusion, we have been waiting years for a Regulation of this kind to put an end to the rather dickensian eternal probate procedures that have blighted families, incurred massive costs and dragged on for years. This legal bickering between different laws and jurisdictions applicable to property, including real estate located Spain, are now doomed to the history books.

We have, though, sacrificed certainty for the sake of the effectiveness of the procedure. That is why it is highly recommended, not only to make a will in all countries where we have property or rights to a certain value, but to properly plan the inheritance to ensure the last wishes of the testator. If you make a new Will, there will then be the certainty of choosing the law ,and the competent authority to deal with it, that suits each situation the best.

The final note is that the lack of clarity in the regulation regarding what a “habitual residence” actually is. This has its advantages and disadvantages. Whilst you can plan your succession and give to whom you decide, their may well be tax issues that need to be overcome, this is again why the best advice is to take advice.