In 2015, the EU introduced new succession rules to simplify cross-border inheritance matters
To benefit from the new EU succession rules, overseas nationals with assets in an EU Member State need to take action in a will.
According to The European Commission some 450,000 cross-border successions occur in the EU each year. These are estimated to be worth in excess of €120 billion. Effective from August 17th 2015, to solve confusion and prevent disputes, the EU introduced new EU succession rules. These rules allow individuals across participating EU member states to choose which country jurisdiction to apply to the devolution of their estate.
Many countries in the EU, including Italy, have laws governing ‘forced heirship’. Forced heirship rules are similar to UK Intestacy rules. However, forced heirship is applicable even if there is a will. The key point is that Italian forced heirship rules take precedence over a will.
In practice, this means that close family members inherit the deceased’s property regardless of the contents of the deceased’s will. This can often be in preference to the deceased’s spouse or partner. Sometimes, this creates conflicts within families who are unfamiliar with forced heirship cultures. Particularly if the deceased had children from previous relationships. According to Italian forced heirship rules, these children must also inherit a share of their deceased parent’s estate.
EU Regulation 650/2012 is also known as Brussels IV
The UK did not opt into Brussels IV when it was still a member of the EU. However, UK nationals with assets in EU countries that adopted the changes, which is all of them except for Ireland and Denmark, can take advantage of Brussels IV.
Brussels IV allows any overseas national who owns property in a participating EU member state to choose either the law of the country of their habitual residence, or the law of their nationality to govern succession of their EU estate. Or, if they have multiple nationalities, they can choose one of their nationalities to govern succession.
Electing a country law provides a way to circumvent forced heirship laws.
EU succession rules allow you to elect a country law in your will
If for example you are a UK national habitually resident in England with a holiday home in Italy. You can now update your English will with a choice of law codicil. This would cover the Italian property with an election for the inheritance laws of England and Wales to apply to it. It means you don’t need a separate Italian will for the Italian holiday home.
That said, it is highly advisable to have either a bilingual Italian will or an official Italian translation of your English will. Preferably, the translated version would be in the hands of a solicitor or notary. This will make things easier, less time-consuming and costly in the long run for the executor of your estate.
Before taking action, it’s important to understand all the implications of the EU succession rules
Before making any changes to your will, it is important to understand Brussels IV and all its implications. For example, Brussels IV does not impact inheritance tax.
As previously mentioned, Brussels IV is applicable to all foreign property owners. However, if you are habitually resident in Italy it is essential that you make or update your will in Italian. In your Italian will, you should clearly state which country’s law you wish to elect. Otherwise, because you are resident in Italy, the laws of Italy will automatically apply when dealing with succession. Again, it is important to understand the Brussels IV regulation and its impact.
Interestingly, Brussels IV does not restrict the choice of law to EU nationals. For example, a US national with property in a participating EU Member State could elect for US law to apply to the succession of their property; an Australian could nominate Australian law; a Canadian, Canadian law, and so on.
As ever, the key is in the planning. If you want freedom of choice, you have it. Just don’t leave it until it’s too late!
Cross-border inheritance law is a complex matter. We recommend you seek independent legal advice regarding your personal situation. For more information about Italian succession and inheritance, you may find our Italian Succession Guide useful.
At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters throughout Italy. We are a full member of STEP, the world’s leading association for trust and estate practitioners. If you need advice, help or have any questions on cross-border inheritance matters, please get in touch.