Why has this EU Regulation been introduced?
There are at least three reasons:
for the harmonization of legal concepts,
• to try to make the cross-border inheritance process easier for the family and for the heirs in general and
• to make succession planning a new tool of wealth transmission.
First of all, the long-enduring development of the initial idea (of common principles in the inheritance process) conflicts with the inevitable differences between the private international law rules of each of the member States. This led to what is commonly referred to as a “juridical compromise”. We can easily trace its footprints in the enormous initial part of the “83 Whereas”.
The different approaches to inheritance issues have obliged the EU Law maker to look at different concepts and regulate them in order that they can be applied directly within the individual jurisdictions of each of the member States. This leads to the second crucial point: an EU Regulation, unlike other international legal instruments, is directly enforceable in each member State jurisdiction and that means that all the regulations form part of Italian law to the same extent as any other provisions on the subject; and such is the case in each member States.
This is quite important in that it relates to the substantial part of the EU Regulation, that is to say the new instrument embodied in the form of the EU Succession Certificate. This is the innovative part of the Regulation which enables the capacity of heirs to be recognized before the Authorities of the Member States and, generally, before the Authority of any State which is entitled to deal with inheritance matters (eg. Revenue Agencies, Estate Registries etc).
This is, in fact, the innovative part of the UE Regulation: the creation and direct enforceability of a legal instrument – the Certificate – which definitely has a new impact on cross-border succession relationships. The final new concept expounded by the EU Regulation is the right to plan succession; the succession planning extensively used in the Anglo-US world, has become a closer concept also to Civil Law countries like Italy.
What are the relevant issues?
The Scope of the Regulation is to deal with the estates of a deceased person (Art.1). That seems quite easy to understand but on a deeper level it brings about a lot of related problems and issues, eg. the status and the capacity of a natural person, the property regimes for spouses and partners, the fiscal consequences of inheritance rights, just to mention a few, whose definition and regime are called for in other documents.
What are the main criteria for a succession to be effectively dealt with as a whole?
Art 21 of the EU Reg establishes that: unless otherwi- se provided the law applicable to the succession as a whole is the law of the State of the habitual residence of the deceased. This general rule applies to the succes- sion of any person deceased within the jurisdiction of the EU, both in cases where there is a will or in the case of intestacy.
Art. 22 of the EU Regulation lays down the Choice of Law rule (better known as professio iuris). It states that a person (the future deceased) may choose the law of her/ his actual nationality (or future nationality in the case of an incoming change/addition) as the law governing the succession of their estate as a whole.
How may this choice of law be effected?
According to Art. 22 (para 2) the choice shall be made expressly in a declaration. That means that a person should clearly state that choice in her/his will or, at least, it should be demonstrated by the terms of the will (eg. “I choose the Law of France to govern my succession” or “ The law of the State where I was born and of which I am a national will govern the processing of my inheritance when I pass away”).
The person can choose the law of a member State (EU member States bound by the Regulation) or potentially the law of any State in the world. This is what is known as the Universal Application of the EU Regulation (Art. 20). This principle assists in handling the succession as a whole and has its own particular consequences in regard to jurisdiction as well (See Art. 34 concerning the renvoi in private international law).
What happens then?
Analysing the Will is of utmost importance. It’s necessary to find out what the legacy consists of. In the Will the deceased person should have written his/her last wishes concerning how the transmission of the estate should be dealt with.
Following on that, and bearing in mind the EU Regulation rules, the heirs (or those family members with some entitlement to the deceased’s estate) can scout for which governing law is to be applied. Afterwards, the heirs should be cautious about evaluating the fiscal impact of the succession in the place where the assets are located.
The EU Regulation, in fact, does not deal with fiscal matters and each State (whether an EU member or not) has its own provisions and, usually, the State is bound by double tax treaties or agreements which focus on that. From a practical point of view the EU Regulation also provides for the Recognition, Enforceability and Enforcement of decisions (Art. 39) on succession matters.
This part of the regulation is extremely important, also for professionals, because it clearly states that the recognition of the inheritance rights of heirs can be a question of fact as soon as the inheritance process begins.
