The European Union Community now consists of 28 Member States with a population of over 500 million. In tandem with efforts to promote the easy movement of people and commerce between the Member States, judicial cooperation in civil matters having cross-border implications, including successions, has been a key common goal among the Member States.
In the realm of succession, one of the main concerns has been that EU member states have differing rules for succession and conflict of law rules to resolve succession matters. Further, the definitions and use of legal terms can vary from one jurisdiction to another. For example some members use the term “domicile” while others use the term “residency;” and even the term “domicile” has differing definitions among members. Such details seem innocuous, yet may indeed impact individuals having to deal with successions and succession planning and the EU, including Canadian citizens resident in the EU and those non-resident but owning property in the EU.
Most provinces in Canada follow British common-law. A notable exception is Quebec law which is based on French-heritage civil law. In a common law jurisdiction, the rules governing succession vary depending upon (i) the nature of the asset and (ii) the domicile of the deceased. The general rule is that immovables are governed by the law of the place where the immovables are situated and movables are governed by the law of the place where the deceased was domiciled.
However, most of the EU Member States are governed by civil law and an important feature for succession purposes is that in certain jurisdictions real estate is subject to “forced heirship” provisions and not by a person’s will—quite a contrast from common-law. In many civil law jurisdictions, forced heirship is described as family members, usually spouses and descendants, having the right to inherit a fixed share of an estate.
In an attempt to reconcile the different rules of succession and improve cooperation between Member States, the European Union enacted EU Regulations No. 650/2012 (the “Regulation”).
EU Regulations No. 650/2012
The Regulation, which became effective on August 17, 2015 (except for certain minor sections, some of which came into force on July 5, 2012 or January 16, 2014), will apply to the succession of individuals dying from the effective date onward.
The Regulation was enacted in order to provide legal certainty and simplify proceedings as well as to harmonize conflicting succession laws.
The Regulation’s purpose is to balance a citizen’s right to organize his or her succession in advance and to predict the structure of their assets; allowing people to choose the law applicable to their succession while, at the same time, allowing heirs and legatees to be able to assert their rights in all the European areas.
According to the Regulation, the term “succession” means all forms of transfer by reason of death; of assets, rights and obligations, whether by way of a will or by way of a transfer through intestate succession. Its practical impact should be important; for example, article 4 provides that “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” while article 39 also provides that “a decision given by a Member State shall be recognized in the other member States without any special procedure being required.” It is evident that the harmonization of conflict of laws rules was one of the main bases for the political agreement that resulted in the final Regulation.
Also relevant is article 22 of the Regulation which provides that a person may choose the law of their nationality as the law to govern the succession as a whole; a professio juris. A person who has more than one nationality may choose the law of any one of them. The substantive validity of the professio juris is to be governed by the chosen, or determined, national law. This is particularly relevant for individuals who reside in a country outside the EU.
Immovable property in a Member State will remain subject to the succession laws of that Member State even for a person who is habitually resident of a Third State (as an example, Canada) so that the law of the situs applies to the immovable unless such person makes a valid professio juris of the law of his or her nationality under Article 22.
For such individuals, the choice the professio juris gives them (of which law they wish to govern their assets/immovables in a EU Member State) may provide them clarity, greater certainty and simplify proceedings.
Another interesting component of the Regulation is Chapter VI that deals with the provision for a European Certificate of Succession (ECS). The ECS is intended to provide proof of the capacity of heirs or legatees and the powers of the executors of wills and administrators of estates. The concept is to grant a ECS (i.e. probate certificate) that could be recognized and used across borders in the EU.
The Regulation is clear that only EU Members can issue a ECS. However, the Regulation is also clear that the use of the ECS shall not be mandatory and that the Certificate shall not be a substitute for internal documents used for similar purposes in the Member State. This somewhat limits the usefulness of the ECS but it is nonetheless a progressive step toward simplifying the planning and administration of multinational estates.
Will Planning For Canadians
As we have seen, although the Regulation is European legislation, it will impact certain Canadians and/or their estates.
For those who draft wills and have clients with ties to EU Member States, considering the impact of the professio juris in the Regulations (post August 17, 2015) when drafting wills may be a necessity. In light of the Regulation, a Canadian resident owning real property in a EU Member State (a villa in Spain for example) shall have the opportunity to access the provision of the professio juris in the Regulation and state in his or her will that Ontario law is to apply to the asset(s) situated in the EU Member State.
The application and consideration of the Regulation in estate and will planning shall be particularly relevant in the following two specific contexts.
1. Canadian nationals residing in an EU Member State
If no valid professio juris has been made, the succession of a Canadian citizen living in a EU Member State (such as France, Spain, Germany, Portugal or Italy) will be subject to the jurisdiction of the court of the state where the deceased resided at their death and local law will apply to the worldwide assets.
The immovables in Canada will pass subject to the relevant provincial law but will be brought back into account in the administration of the EU Member State. However, a professio juris provides the ability to choose the relevant provincial law and the court in the EU Member State shall apply the relevant provincial law to the estate/assets as a whole.
2. Canadian resident with assets in an EU Member State
An immovable asset of a Canadian resident situated in a EU Member State will be subject to the jurisdiction of the court in that EU Member State and the local law will be applied to the local immovable only. However, proper will and estate planning shall consider incorporating a valid professio juris in the will affording a Testator the choice to apply their provincial law to the immovable asset situated in the EU Member State.
Canadian estate and will planners should review the Regulation as it may become an essential consideration for their clients living in an EU Member State or those owning assets in an EU Member State. Although the effects of the Regulation will only be clearly seen in practice over time, and certain areas will need to be worked out (matrimonial rights and policy conflicts notably) the changes are positive and should simplify and reduce the costs related to the resolution of cross-border succession issues in the EU for citizens of other counties.
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**Author’s Note: This article was originally published in the September 2015 version of the STEP Canada Ottawa Branch newsletter**
Disclaimer: This article is provided as an information resource and is not intended to replace advice from a qualified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship.