Most European citizens living abroad ignore this fact. In the absence of a formal declaration to the contrary, their succession will be governed by the law of the country in which they reside.
This rule, which replaced the old principle based on nationality, was introduced by the European Succession Regulation No. 650/2012, which came into force on August 17, 2015.
From a practical point of view, the consequences can be shocking, especially with regard to the quotas of the legitimate share. The children of an Italian citizen living in London might find that the will by which their father disposed entirely of his estate in favor of other individuals cannot be challenged, because under English law they are not entitled to a reserved share. Similarly, a French citizen who had excluded his descendants while living in the United States might find his will nullified by moving to Italy.
The Regulation, to be precise, states in Article 21 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”. The concept of “habitual residence” requires interpretation each time because it does not correspond to the registered residence. In addition, the death may have occurred when the person was residing in one place because of a temporary situation, such as a temporary job or long hospitalization.
To reduce the risk of irrational application of the governing law, the second paragraph of Article 22 provides a so-called exception clause, which waives the habitual residence rule when it is clear that the deceased had significantly closer connections to a different state. The law of that state will then apply.
The exception clause, for example, would apply in the case of a Dutchman completing a period of education in Germany but with his family, estate and place of business in the Netherlands
However, let’s read what the rule says literally: “if, by way of exception, it is clear from the totality of the circumstances of the particular case that, at the time of death, the deceased had manifestly closer connections with a different state”, etc.. To recap: “exceptionally,” “from the totality of the circumstances,” “clearly,” “manifestly”: that’s not quite the same as saying “never,” but it’s certainly very close to “if it just can’t be avoided!”
The truth is that the judge, who may apply the exception clause upon request of a party or ex officio, will not be overly motivated. Even if the exception clause were applied, in fact, the territorial competence would remain that of the last habitual residence. To give an example, the Italian court applying the exception clause to a Chinese person who was only casually resident in Italy would then have to handle the disputes according to Chinese law.
Article 21 thus leaves room for uncertainty about the testator’s planning. And yet, given that Article 4 of the Regulation in turn establishes territorial jurisdiction on the basis of residence, in most cases the courts will judge succession matters according to the law of the nation in which they operate, and this will certainly contribute positively to the quality of the judgments.
It should be remembered that the Member States (almost all those in the European Union) apply the Regulations universally, i.e. whatever the nationality of the deceased. This means that there will never be a conflict of laws between Belgium and Spain. But if a Brazilian citizen dies in Italy, Italian law may come into conflict with Brazilian law.
The criterion of residence can be replaced by that of nationality. The Brazilian citizen in the last example could, by a formal declaration, choose Brazilian law.
The Regulation, in any event, represents a major advance for the freedom of succession planning and an expansion of opportunities. For anyone residing abroad, even for limited periods, it would be advisable to seek the advice of specialists in the field, both to ensure that his or her succession will not be disrupted by chance and to assess whether that residence does not offer the opportunity to make the will even more effective and, by extension, more tax-efficient.
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