23 Nov Maximum caution with inheritances that contain goods abroad
Some time ago we wrote in the blog about the entry into force of EU Regulation 650/2012, 4 July 2012 that regulates successions, and that is applicable to most of the countries of the European Union.
This Regulation supposed great advances for the citizens of the Union in as much it makes possible the election of the applicable law in matters of succession. As a result, is no longer necessary to apply the former and rigid criterion of the nationality of the deceased, which used to be a big headache for those who had established their residence a long time ago in another country but did not have the same nationality.
Inheritances can have an international component. In our case, it can be either the case of Spanish citizens residing abroad but who have an immovable property in Spain or the case of foreigners strongly related to Spain but who, in turn, have some elements of the succession -goods, heirs- localized in other countries.
In this situation, many questions emerge such as What law governs my succession? Does that law apply to the entire inheritance? If I have immovable property abroad, are they governed by the same law as the one governing the succession? What happens with other issues like inheritance tax, matrimonial property regime, etc?
It is clear that the case shows a complexity that will make the presence of prior advice necessary, but there are two principles that will always apply from the entry into force of the European Regulation:
Principle of Unit of Goods
As we mentioned earlier a person can choose the lwa applicable.
If you have Spanish nationality and reside in France, you can choose to have Spanish law or French law applied to your inheritance. In the absence of choice, the law applicable to the succession shall be the law of the State in which the deceased had his habitual residence at the time of death.
But Watch out, the applicable law will be the same for the succession as a whole regardless of where the goods or heirs are located.
So, perhaps, in some cases, if all the heirs are located in another State other than the deceased’s residence, they may want to apply the law of their State.
Or perhaps the most important good of the succession is also in a state other than the habitual residence of the deceased.
In both cases as we see, the possibility of choice facilitates the path to a more adequate planning.
The afore mentioned is applicable when the States in connection are members of the EU. It may be the case that there are other States connected to that inheritance, either by location of the immovable property, or because the deceased wants to choose the law of his Motherland. We can think of Latin American or China citizens living in Spain, as an example of the most popular nationalities among foreigners living in Spain.
Matters uncovered by the law of the chosen Country.
There are several subjects that have a great importance in the succession planning and that, as we are going to see, are excluded from the general applicable law election that has been made or, in the absence of choice, will not be ruled by the criterion of habitual residence.
This happens given that, in regards of certain matters that involve Public policy (ordre public) or Administrative issues, the State Members are not willing to cede their sovereignty and are still regulated by the Law of the nationality of the deceased.
- The inheritance tax will be regulated by the Law of the country where the heirs who must pay the tax reside. The heirs, as taxpayers, will enter the tax payment in the corresponding Treasury, without prejudice to other taxes that accrue in the State where immovable property are based as a result of their transmission.
- The matrimonial property regime, which, like the civil status, is only a matter of the National Law of the deceased.
- The same assumption above is applied to marital status and legal capacity of natural persons.
- The dissolution or extinction of companies and legal persons are also excluded.
To sum up, as we can see, the existence of goods, interests or heirs that contribute to making the inheritance process more complex makes a preventive advice even more necessary. This preventive advice should range from the drafting of testamentary dispositions or tax questions to the economic regime of the spouses.
If you find yourself in a situation like the one described above, do not hesitate to contact with Navarro Llima Abogados.