EU Succession Regulation & Australian Estate Planning

If you own property in a member state of the European Union or if you are a citizen of an EU member state, then you must consider the EU succession 650/2012 regulation when making your estate plan to ensure your assets are protected for future generations.

 

Background

The EU Succession Regulation EU 650/2012 was adopted by 25 countries (excluding Denmark, Ireland and the UK) and came into force on 17 August 2015. The Regulation aims to simplify and unify EU estate administration across all member states.

Which succession law applies to my assets in the EU?

The default position under the EU Succession Regulation is that the law of 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.

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, then the EU Succession Regulation is relevant to your estate.

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

If the EU Succession Regulation applies to your estate, 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; your Australian estate plan can be tailored, or your will can be amended accordingly. While the EU Succession Regulation has fundamentally changed the private international law of the EU, it has not changed the private international law of non-EU members, which continue to apply their own private international law rules. The EU Succession Regulation will take 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.

Therefore, if you do not have a will but you own real property in an EU member state, local law will apply in relation to the real property you own in an EU member state. The consequence is that your estate could be subject to a forced heirship claim or be passed on to persons you do not want it to be passed on to.

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

Section 22 of the EU Succession Regulation provides that a person may choose the entire law of the State of his or her nationality to be the law that governs their succession. This is determined at the time of making the choice or at the time of death. It further provides that a person possessing multiple nationalities may choose the law of any of the States. A choice of law is also valid even if the law under which your will is made does not permit a choice of law. In general, you must choose the law you want to apply to your estate in your will.

Example

Australian citizen Jane is married to John and has no children. She owns a holiday house in Germany. She has no contact with her parents and does not want them to inherit from her. Jane dies without a will. Pursuant to the EU Succession Regulation the law of the last habitual place of residence applies to Jane's estate. Under the law of NSW, German law applies to Jane's German estate in relation to immovables (ie land). Under German law, because Jane left no children but was married, her parents inherit half of her estate. The outcome would be different if Jane 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 been able to bring a claim for a fixed compulsory share under German law.

Need assistance?

If you own property in an EU member state, you should review and obtain advice about your will to make sure that no amendments are required. Our experienced Wills & Estate Law Team will be able to assist you with this or any other question '€“ contact us now.

About the author: Markus Christmann

Fluent in both English and German, Markus's work includes the preparation of estate planning documents such as wills, powers of attorney and supporting documents. He also advises and acts in estate administration and estate litigation matters. He is also admitted as a lawyer in Germany and as such he is uniquely qualified to advise on cross-border wills and estate matters. Markus has a particular interest in international estate planning and international estate administration, including the effect of overseas wills in Australia and the managing of probate overseas. View Markus' profile. '