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International Succession Planning

International Succession Planning

International succession pertains to the estate of a person who dies in a

country other than that of their citizenship or residence or someone who leaves movable or immovable assets in a country other than that of their citizenship or residence. If, for example, you are a foreign national who owns a second home in Italy, your estate will be subject to international succession procedures.

Since August 2015 new EU regulations governing inheritance have been in force. These regulations aim to simplify and speed up international inheritance matters and to make cross-border succession procedures more efficient. Prior to their introduction, international succession was governed by laws that differed from country to country.

There have now been a number of cases regarding the interpretation of the new EU regulations. One such case of international succession was brought to court in Salerno in 2018.

The case in question involved two brothers who co-owned three properties in Italy. In 2016 one of the brothers, an Italian citizen, died in New York where he was resident. He died intestate so there was no Will.

The deceased is survived by his wife and six brothers, including the brother who is co-owner of the three Italian properties. The latter took legal action to wind-up the property co-ownership between himself and his deceased brother, then he filed an inheritance claim for his brother’s share in the property.

Legal requirements for dissolving co-ownerships are governed by art. 24, paragraph 1 of EU Regulation 1215/2012 (so-called “Brussels I bis”), which entrusts the case to the court of the country where the property is located.

For estate divisions, the court  in Salerno applied the Brussels IV regulation. Article 4 of the regulation establishes that the jurisdiction which rules on the succession as a whole is that of the country where the deceased was habitually resident at the time of death. However, Article 10 provides for subsidiary jurisdiction of courts in which the estate is located if the deceased was a national of that country at the time of death.

Returning to the case in question, the court of Salerno considered that, based on the circumstances, the deceased was habitually resident in the State of New York and established that the case should be governed by the law of NY State.

Just to make things more complicated, reference must also be made to the rules of private international law. The rules governing New York private international law provide that the law of the place where the property is located applies to the succession concerning immovable assets.

The judge has adjourned the case and requested that parties produce U.S. regulatory sources. This is something of a landmark case. It sets a precedent inasmuch that judges have the power and duty to ascertain foreign regulatory sources of their own volition.

Although Regulation 650/12 aspires to harmonise international succession, in terms of effectiveness it is confusing and open to interpretation. The crux of the matter is that when it comes to international succession and division of estates, whereas Italian inheritance law specifically provides for rights belonging to so called, “forced heirs”, whose quota is guaranteed, in countries based on common law systems, such as the UK and the USA, testators can rule on how estates should be divided.

To make life simpler for those you leave behind, it is crucial to have a Will.

Article 22 of Brussels IV allows individuals to make an election in their Wills for the country of their nationality, or where individuals have multiple nationalities any one of their nationalities, to apply to their Italian assets.

In effect, this means that you can avoid any jurisdictional confusion after your death. However, you need to take action by making, “Choice of Law Codicil” in your Will.

If you are in the process of drafting or reviewing your Will, you need to consider aspects such as foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights with respect to your estate before deciding which law to apply to the devolution of your estate.

Should you need further information concerning the topic, our legal professionals will be glad to provide you with guidance. Please contact De Tullio Law Firm at the following email address info@detulliolawfirm.com