Regulation (EU) No. 650/2012 of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession (the “Regulation”) makes cross-border inheritance simpler by clarifying which EU country’s courts will have jurisdiction to deal with the inheritance and which law the courts will apply. Under the Regulation, the courts of the EU country where the person habitually resided at the time of their death will deal with the inheritance and will apply the law of that EU country. However, citizens can choose the law of their country of nationality to apply to their estate, whether it is an EU or a non-EU country.
Judgements on inheritance given in one EU country will now be automatically recognised in other EU countries. In addition, a European Certificate of Succession enables people to prove in other EU countries that they are heirs, legatees, and executors of the will or the administrators of the estate.
Disclaimer: Readers of this newsletter should note that at the date of circulation of this article, the Maltese Civil Code, Cap. 16 of the laws of Malta (the “Maltese Civil Code”) may be subject to further amendments by the Government of Malta and any relevant Government entities. New European laws may also be issued which may affect the Regulation.
What is the scope of the Regulation?
The scope of the Regulation is to apply to the estates of deceased persons. It shall not apply to revenue, customs or administrative matters.
All EU Member States have signed up to the Regulation with the exception of the United Kingdom, Ireland and Denmark. The Regulation will apply to deaths that occur on and after 17 August 2015.
The courts of the Member State in which the deceased had his habitual residence at the time of death shall have jurisdiction to rule on the succession as a whole.
Where the habitual residence of the deceased at the time of death is not located in a Member State, the courts of a Member State in which assets of the estate are located shall nevertheless have jurisdiction to rule on the succession as a whole in so far as:
1. The deceased had the nationality of that Member State at the time of death; or, failing that;
2. The deceased had his previous habitual residence in that Member State, provided that, at the time the court is seized, a period of not more than five years has elapsed since that habitual residence changed.
Where no court in a Member State has jurisdiction pursuant to the above, the courts of the Member State in which assets of the estate are located shall nevertheless have jurisdiction.
In accordance with Article 21 of the Regulation, the general rule is that the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.
However, if by way of exception, it is clear from all the circumstances of the case that at the time of death, the deceased was manifestly more closely connected with a State other than the State whose law would be applicable as per the above, the law applicable to the succession shall be the law of that other State.
Choice of law
A person may choose, as the law to govern his succession as a whole, the law of the State whose nationality he possesses at the time of making the choice or at the time of death.
A person possessing multiple nationalities may choose the law of any of the States whose nationality he possesses at the time of making the choice or at the time of death.
The choice shall be made expressly by means of a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition. The substantive validity of the act whereby the choice of law was made shall be governed by the chosen law.
Any modification or revocation of the choice of law shall meet the requirements as to form for the modification or revocation of a disposition of property upon death.
Scope of the Applicable Law
The law determined pursuant to the general rule or the choice of law shall govern the succession as a whole.
In accordance with Article 23 of the Regulation the determining law shall govern:
- The causes, time and place of the opening of the succession;
- The determination of the beneficiaries, of their respective shares and of the obligations which may be imposed on them by the deceased, and the determination of other succession rights, including the succession rights of the surviving spouse or partner;
- The capacity to inherit;
- Disinheritance and disqualification by conduct;
- The transfer to the heirs and, as the case may be, to the legatees of the assets, rights and obligations forming part of the estate including the conditions and effects of the acceptance or waiver of the succession or of a legacy;
- The powers of the heirs, the executors of the wills and other administrators of the estate, in particular as regards the sale of property and the payment of creditors, without prejudice to the powers referred to in Article 29(2) and (3);
- Liability for the debts under the succession;
- The disposable part of the estate, the reserved shares and other restrictions on the disposal of property upon death as well as claims which persons close to the deceased may have against the estate or heirs;
- Any obligation to restore or account for gifts, advancements or legacies when determining the shares of the different beneficiaries; and
- The sharing-out of the estate.
European Certificate of Succession
The Regulation creates a European Certificate of Succession (the “Certificate”) which is issued by the Member State (upon application by the heirs, legatees, executors of wills or administrators of the estate) whose courts have jurisdiction, for use in another Member State and which produces its effects in all Member States, without any special procedure being required. The Certificate is for use by heirs, legatees having direct rights in succession and executors of wills or administrators of the estate who, in another Member State, need to invoke their status or to exercise respectively their rights as heirs or legatees and/or their powers as executors of wills or administrators of the estate.
The Certificate may be used, in particular, to demonstrate one or more of the following:
- The status and/or the rights of each heir or, as the case may be, each legatee mentioned in the Certificate and their respective shares of the estate;
- The attribution of a specific asset or specific assets forming part of the estate to the heir(s) or, as the case may be, the legatee(s) mentioned in the Certificate; and
- The powers of the person mentioned in the Certificate to execute the will or administer the estate.
The person mentioned in the Certificate as the heir, legatee, executor of the will or administrator of the estate shall be presumed to have the status mentioned in the Certificate and/or to hold the rights or the powers stated in the Certificate, with no conditions and/or restrictions being attached to those rights or powers other than those stated in the Certificate.
The use of the Certificate is not mandatory. The Certificate does not take the place of internal documents used for similar purposes in the Member States.
Implementation of the Regulation in Malta
The law of succession in Malta has proven to be a reliable legal regime that can be applied with certainty to succession matters. Such law identifies and separates movables from immovables in order to treat them under different laws. The lex situs, the law of the place where the assets are located applies to the immovable, whereas the lex domicilii applies to the movable assets of the deceased.
The Regulation imposes the unitary system and also allows the choice of law, whereby any person can choose the law between the law of nationality and that of the last habitual residence of the deceased to be the law that governs the succession.
Although the Maltese Government contested the unitary system and demonstrated its objections and concerns, the Notaries of Europe were in favour of its inclusion in the Regulation.
The Regulation was made part of the Maltese Civil Code through Act XVI of 2015 which became law in June 2015. Implementing the Regulation has resulted in a number of amendments to the Maltese Civil Code. In particular, a list of the competent authorities for issuing a Certificate has been added, empowering the Civil Court of Voluntary Jurisdiction of Malta to act in all cases, and Notaries in cases where all the beneficiaries of the succession are in agreement on the contents of the Certificate, and where they have expressed their consent in writing.
Notaries must refuse to issue a Certificate if an application has been made to the Civil Court of Voluntary Jurisdiction of Malta or where the agreement in writing of the beneficiaries has not been obtained, or where the Notary is aware of a dispute concerning the inheritance. A decision of an issuing authority may be challenged by means of a sworn application before the First Hall of the Civil Court. Additionally, an appeal may be lodged before the Court of Appeal, within 20 days from the date of judgment of the First Hall of the Civil Court.
Thus, the innovations to the Maltese Civil Code provide for methods of recognition and enforcement in Malta of judgments of the courts of other Member States in terms of the Regulation, for the issue and challenge of a Certificate.
The Regulation is certainly a challenge and a learning curve for practitioners, researchers and academics.
However, it is clear that it redefines the characters of EU cross-border successions. More fundamentally, time-honoured rules of jurisdiction and applicable law will be swept away and displaced by the Regulation.