If you are a citizen of an EU member state or if you own assets in a member state of the European Union, then it is important that you consider the EU Succession Regulation 650/2012 when making your state plan.

Background

Historically, each EU Member State had its own set of rules and requirements regarding succession and inheritance. The crosse-border application of local inheritance law often led to contradictory results and incurred significant costs and stress for the beneficiaries. To avoid contradictory results and to ensure that the last wishes of a deceased person are followed, 25 Members States (excluding Denmark, Ireland) adopted the EU Succession regulation 650/2012, which came into force on 17 August 2015.

I live in the Australia – How can the EU Succession Regulation be relevant to me?

The EU succession regulation applies to assets located in a member state. Therefore, if you own assets in an EU member state or if you are a citizen of a EU Member state, then the EU Succession Regulation is relevant to your estate.

Example: Your parents were migrants from an EU Member State and they have passed away. If now you own the property in an EU Member State, then the EU Succession Regulation applies to you

Which succession law applies to my assets in the EU?

Pursuant to section 21 of the EU Succession Law Regulation, the law of the place where you are habitually resident at your death governs the succession as a whole.

Under the EU Succession Regulation the place where you are habitually resident at your death governs the succession to your estate as a whole, unless:

 

• • you were manifestly more closely connected with another country when you died (for example, because you had only just moved).

• • you choose to apply the law of your nationality instead (a choice of law can be made by will and you can only choose a law of your nationality). If you made a will before 17 August 2015 in accordance with the law of your nationality, you may be treated as having chosen to apply that law even if your will doesn’t mention this.

Example: If you are permanently resident in NSW, Australia and you own a house in Germany, then the succession law of NSW applies to your property in Germany. 

Why is it important to know that the EU Succession Regulation applies to my estate?

If the EU Succession Regulation applies to your property, you need to know which law applies to your assets that are in the EU. Once this has been established, you can act on this knowledge and tailor your estate plan accordingly.

How does this work in relation to residents of Australia?

While the EU Succession Regulation has fundamentally changed the private international law and its application between EU Member States, it has not changed the private international law of non-EU members countries, which continue to apply their own private international law rules. That means that the EU Succession Regulation takes Australian international private law into account, which means that:

 

• • Australian law applies in relation to movable assets (eg bank accounts);

• • The law of the country where the immovable asset (eg real property) is located applies to that asset.

Example: You do not have a will and own real property in an EU Member state. In this case, local law will apply to the real property you own in an EU Member State. The consequence is that your estate could be subject to forced heirship claims or would be passed on to persons you do not want to receive a share of your estate.  

Can I choose the law of any Australian state or territory to apply to my estate?

Pursuant to section 22 of the EU Succession Regulation a person may choose the entire law of the State of his or her nationality to be the law that governs their succession. While Australian law does generally now allow the choice of law in a will, any such choice in an Australian will would be considered valid by the probate courts in the EU Member states.

Example 1

Australian/German citizen Birgit is married to Peter and has no children. Birgit owns a holiday house in Germany, she inherited form her grandmother. Birgit has no contact with her parents and does not want them to inherit from her. Birgit dies without a will. Pursuant to the EU Succession Regulation the law of the last habitual place of residence applies to Birgit’s estate. Thus, under the private international law of NSW, German law applies to Birgit’s German estate in relation to immovables (ie land). Under German law, because Birgit left no children but was married, her parents inherit half of her estate.

The outcome would be different if Birgit had left a will and had chosen the law of NSW to apply to her will. The German estate would have been governed by the laws of NSW and her parents would not have inherited a share in her estate. They would also have been precluded from bringing a claim for a fixed compulsory share under German law.

Example 2

German citizen Klaus, a resident of Wollongong, NSW, owns real property in Germany, which he inherited from his parents. He assumes that it will be inherited by his wife Eva and not by his two children. Klaus does not have a will. While under the laws of NSW, Eva would inherit the whole property, under German law, children receive a share next to their parent. Because Klaus does not have a will, Eva has to share the property in Germany with her children and should one of them pass away, with their spouses. This situation would be different if Klaus left a will and has chosen that the law of NSW should apply to his will and estate.