9 October 2023
It is wise during life to think about what you want to happen to your assets after death. This is perhaps even more true for expats.
In the case of international influences it is not always possible to predict in advance how your estate will be settled. However, you can get informed about this and – in most cases – take control. After a decease, it must be determined which law applies to the settlement of the estate. After all, each state has its own rules of law. Within the European Union this question is answered on the basis of the EU Regulation on succession law. As will be explained below, it is nevertheless not always easy to determine the applicable law.
According to the aforementioned EU Regulation a choice of law can be made during life (by will). You can choose the law of the state of your nationality at the time of the choice of law or the time of death. Your estate will then be settled according to the law of this nationality.
If no choice of law is made, the general rule applies. In that case, the law of the state of the last habitual residence is applied. The last habitual residence is not the same as domicile: it is the social residence. Meaning, the country with which the person’s social and civic life is most closely connected. To determine this, important factors include the length of residence in the state as well as the circumstances and reasons for residence. This can already generate quite a bit of discussion.
Once the applicable law has been determined, we are not there yet. This is because the EU Regulation uses a system whereby not only the succession law of the designated state is applied, but also the international law of this state. This means that the law of the designated state can refer to the law of another state. Are you still following?
The problem is best explained by a recent decision of the District Court of The Hague dated January 25, 2023 (ECLI:NL:RBDHA:2023:882). In that case, testator had the Dutch nationality, but lived in Sri Lanka at the time of death. Testator had assets in both countries, including real estate and bank accounts. The Dutch court in the end declared the law of Sri Lanka applicable. But this did not end the matter. Indeed, according to the EU Regulation, Sri Lanka’s international law had to be applied. Sri Lanka’s international law referred to the law of the Netherlands for certain parts of the estate.
The conclusion in this case was that the real estate located in Sri Lanka should be settled under the law of Sri Lanka and the remaining property (real estate and all property rights in any state) under Dutch law. It is difficult to imagine that testator foresaw this during his lifetime.
The applicable law can have far-reaching consequences for how your estate is settled. There are different views in states on important issues such as the legitimate portion (a minimum child share for disinherited children) and the rights of a surviving spouse. As follows from the above, without a will with a choice of law, it is not always possible to predict how your estate will be settled. If you want to avoid surprises, get informed about the different law systems and, if desired, record your choice of law.
Should you encounter any problems during the settlement of an estate, feel free to contact GMW lawyers. We will be happy to assist you.
9 October 2023
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