Considerations in Changing Succession Laws Globally
Introduction
One should know about the legal consequences associated with moving to another country for living, such as tax consequences. These legal consequences have great economic importance. But it is even more important for that people see inheritance laws when moving abroad, because there are also major consequences associated with them. One should also know the importance of writing a will in terms of inheritance of assets.
The formation of a new Union rule that is only designed to facilitate cross-border successions, which was imposed on July 4, 2012, makes it easier for individuals living abroad to handle the legal consequences of international succession. These new rules also applied to the succession of those who died on or after August 17, 2015.
The Regulations ensure that cross-border matters of succession are consistently treated by one single authority under a single law. According to the law, the court of the Member State, which deals with the legal consequences of the citizen’s last habitual residence, will have jurisdiction to deal with their succession and will apply the laws of this Member State. But citizens can also choose the law that should apply to their succession. This choice of law should be the law of the country whose citizens they were originally.
The European Certificate of Succession (ECS) was also introduced by the regulators. This document deals with the succession used by heirs, legatees, executors of wills, and administrators of the states to prove their status and regulate their legal rights or powers in other Member States. The ESC is well known in all the Member States without any special protocol.
High net-worth individuals have cross borders aspects because they own high-value assets and have connections to multiple jurisdictions around the world. In order to give legal advice to them, one should know about the internal succession laws. The individual’s ability to decide to whom his assets, including spouses, relatives, parents, children and their descendants, will pass upon his death is determined by the laws of the relevant jurisdiction to which he is related, along with international estate tax implications. The principles of private international laws (PIL) are used when there are many countries’ jurisdictions involved.
Recent Developments in Europe
In Europe, the following are some key developments related to succession and the impact of these changes on international estate and succession planning:
Private International Law (PIL)
The private international exercise control over the rules on international succession. This is also known as “conflict of laws” rules. For example, in England and Wales, private international law is the part of the main laws that totally deals with the foreign element associated with a succession. The foreign element means a citizen is in contact with some system that is in another country rather than England and Wales. We should use PIL to determine the country’s and jurisdiction’s laws that the English government is going to follow. Every country or jurisdiction has its own private international laws.
European Union (EU) Succession Regulation
The European Union (EU) Succession Regulation, also known as Brussels IV, came into effect on July 4, 2012. This succession regulation only applied to those who died after August 17, 2015, in order to overcome the complexities and conflicts arising due to different systems of succession laws within the European Union (EU). With the help of these succession regulations, individuals are able to own assets in signatory member states by clearly knowing and choosing the exact laws that deal with this type of succession. This automatically minimises the risk of conflicting laws between individuals and member states.
A general rule in this EU succession regulation is that the law of the state of the habitual residence of the dead person at the date of death will be the same law applicable in which he lived in his life. In habitual residence, an election is conducted by the will of individuals to vote for their law of nationality to apply. Those who have dual nationalities can choose either one or other of those nationalities.
Brexit
The United Kingdom was also included as a member state of the European Union but did not approve this regulation. The UK has left the EU, and the position has become clear. The United Kingdom was a third party to which the EU law of succession does not apply. In other words, the PIL regulations of the UK do not affect the PIL regulations of EU member states.
Changes to Inheritance laws in 2023
In 2023, two changes or amendments to the Civil Code, which deal with inheritance laws, came into existence. The first amendment is the introduction of a new legal form—a family foundation—and the second amendment is to simplify and clarify the existing ruling laws so that individuals can better respond to the changing legal realities.
Amendments to the Civil Code effective from May 22, 2023
The new regulations provide an ability to inherit a family foundation developed by testators by the will if the testator entered the will within two years from the date of announcing the will in the register of the foundation. These new rules also changed the rules on renunciation of inheritance. Now, his future successor has entered into an agreement under which he will reject the inheritance with whom he signed the agreement. In this case, the successors are not included in the inheritance succession and are also not legitimised.
Amendments to the Civil Code effective from 15 November 2023
The amendments to the Civil Code introduced two new situations in which a person is considered unworthy of inheritance, so a court has to find an heir unworthy. If the court declares an heir unworthy, he is unable to enjoy all the benefits from the deceased's estate or the successor's estate. An heir can also be considered unworthy according to the new amendments of 2023:
If the person consistently failed to prove and fulfil the maintenance obligations towards the successor, which are determined by jurisdiction and involved in settlements outside the court.
If consistently avoiding the duty of care over the testator, particularly duty from parental authority, acting as foster parents, and care, also include the marital duty of mutual assistance or the duty of mutual respect and support between the child and the parent.
As an heir is sentenced as ineligible for inheritance secession, he is unable to fulfill the maintenance obligations.
Tips to Escape from the Cross-Border Danger Zone
The following are some tips that can be used to find a way to escape from the danger zone of cross-border inheritance successions:
A time to plan
We know that the laws of succession activate after the death of the testator. So, a person is fully aware at the time he is setting his will about his international links, assets, beneficiary enterprises, and other relevant succession laws. You must regularly review your will in order to have proper peace of mind.
Connections
Habitual residence, residence, nationality, citizenship, and domicile are all different types of tests, used for different legal concepts and taxes and considered differently in different courts of law.
Inheritance Tax
The regulations on successions and wills do not cover the issues related to inheritance tax. For example, a person resident abroad is willing to choose Swedish inheritance legislation in order to remove tax obligations because he think that the inheritance tax will vanish because the Swedish laws do not have inheritance taxes. But inheritance taxation follows different rules.
Conclusion
In conclusion, the jurisdictions of every country are now making amendments to the inheritance succession in order to clarify and minimise misconceptions about the inheritance laws. The amendments of 2023 to the inheritance laws make a clear difference in the existing laws. The inheritance succession should only be given to the real heir of succession, not the person portraying himself as the heir.