By Irit Gertzbein, LL.B of Gertzbein Law in Association with WEL PARTNERS

With increased globalization, family wealth may now span across multiple countries, and even continents. Upon death, a conflict of laws arises when the legal regimes of several jurisdictions apply – each with different and sometimes contradictory laws – and each bringing about different legal outcomes.

Cross-border succession

At law, every country possesses an exclusive sovereignty and jurisdiction within its own territory. The laws of every country, therefore, affect and bind directly all property, whether real or personal property, within its territory.

For example, the passing away of a Canadian, resident in Ontario, who owned real estate in Spain, would create a situation where the succession laws of one jurisdiction are in opposition to the laws of the other jurisdiction. The deceased Canadian’s property located in Spain would be subject to Spanish succession laws, which differ from succession laws of Ontario, most notably with respect to “forced heirship” in favour of spouses and children. If the Canadian individual had intended to gift the property located in Spain to a friend or to charity, Spanish forced heirship rules may impact the Canadian’s wishes with respect to that property.

The new European Union Succession Regulation

In the past there has been no uniform succession law applicable in Europe to give guidance to those who live or own property there, with respect to the succession of their assets located in Europe, upon death. The need for legal certainty and simpler court proceedings pertaining to the succession of estate assets has gone unmet among the European countries – until last year.

On August 17, 2015, the European Union Succession Regulation (“EU Succession Regulation”) came into effect to alleviate the difficulties and unintended results faced by individuals who own property in Europe, and to eliminate the need for the conflict of laws principle from applying and being addressed in multiple courts, as well as bringing about less cumbersome and less expensive international succession.

All countries who are part of the European Union, with the exception of Ireland, Denmark and the United Kingdom, are signatories (“Participating Nations”) to the new EU Succession Regulation. Where a citizen or resident of one of the Participating Nations directs, in writing, which country’s succession laws are to apply at his or her death, then, regardless of whether the succession ultimately occurs as per the deceased’s Last Will and Testament or as per the Rules of Intestacy, the chosen country’s succession laws will apply instead of the local laws.

Good news for Canadians

In essence, the EU Succession Regulation allows individuals who own property located within Participating Nations to opt out of that jurisdiction’s succession laws in favour of another jurisdiction’s laws, even if that other jurisdiction is not in Europe. The EU Succession Regulation enables individuals to choose either their nationality or their residency (where they differ) to determine the laws that will govern the succession of their estate, across all European borders (with the exception of Denmark, Ireland and the UK).

The benefits of adopting the new EU Succession Regulation by the Participating Nations include:

• The application of a single law by a single court, enforceable in all other participating nations’ jurisdictions;
• Creation of a European Certificate of Succession, akin to a Certificate of Estate Trustee or Letters Probate in Canada which, once issued, authorizes the executors or administrators of an estate (referred to as a liquidator in Quebec) to act upon the estate, and provides the beneficiaries with the ability to exercise their entitlement across borders of participating nations without further proceeding;
• Citizens and/or residents of participating nations with multiple nationalities are able to choose whether the law applicable to their succession will be that of their residence or that of (one of) their nationality; and,
• Elimination of parallel court proceedings and conflicting judicial decisions and, therefore, a significant reduction in the cost and time spent administrating and distributing estates.

Seek counsel

As a rule of thumb, the evolution of law follows Policy decisions, at some level. Sometimes new laws are meant to impose tighter restrictions, and other times legal reform is meant to expand citizens’ rights and advantages. In the case of the EU Succession Regulation, it is intended to be the latter. For Canadians who have ties to Europe in terms of property located there, this new law will provide advantageous estate planning opportunities.

As always, there is a caveat: estate planning is never simple. The introduction of new law creates, in addition to the new opportunities and advantages, further complications. It’s important for anyone who owns property within the European Union to review his or her estate plan with the appropriate professionals. The new succession rules are complex, and while revising Wills to take advantage of the opportunities available as a result of the new rules is recommended, conflicts of laws may still arise in the future in certain circumstances due to the opting out of some of the European Union nations from signing on to the EU Succession Regulation. Obtaining a specialist’s professional advice is recommended.

The Regulation will apply to the estate of any individual who died on or after August 17, 2015, whose last habitual residence was a European Union Member State, who had assets located in a European Union Member State, or, who chose in his or her Will the law of another Member State of which he or she was a citizen.

See the following link for more information regarding Gertzbein Law in association with WEL PARTNERS: https://welpartners.com/gertzbeinlaw