International inheritance law - What does this mean in Austria?
International inheritance law - What does this mean in Austria?
International inheritance law – What is it and why is it relevant for Austria?
The following scenarios are involved:
- You live abroad or are planning to move away?
- Your relatives who will leave you something live in another country?
- You want to spend your retirement in the sunny south, for example in Spain?
- You are to inherit a house abroad or you own a house abroad?
Whenever people and assets from different countries play a role in inheritance, international inheritance law also comes into play in Austria.
From the perspective of potential heirs, these are the most common cases:
- You live in Austria but are to inherit something abroad, e.g. in Germany (inherit abroad).
- You live abroad and are to inherit something in Austria (heir lives abroad).
From the point of view of those planning their inheritance, these are the most common cases:
- You want to bequeath something to someone who lives abroad.
- You move abroad and wonder what this means for your estate and your heirs.
- You have property abroad and want to bequeath it.
International succession law answers two fundamental questions in this context:
Question 1: Which law is applicable to the estate?
This concerns, for example, the following questions:
- Are German or Austrian formal requirements applicable to the will?
- Are there claims to a compulsory portion under Austrian law? Or does English law apply, which does not know any right to a compulsory portion?
Question 2: Which court is competent for the probate proceedings?
This concerns e.g. the following questions:
- If the deceased person last lived in Spain: Do Spanish courts decide? Can the proceedings also be conducted in Austria?
- What applies if, in addition to assets in Austria, there is also an account in Germany or a house in Italy?
International inheritance law in Austria: Which legal provisions apply?
International inheritance law in Austria: Which legal provisions apply?
The EU Inheritance Regulation applies in the European Union. It regulates the applicable law and the competent court. It applies in all member states of the EU, with the exception of Ireland and Denmark.
The Regulation must be taken into account in both intestate succession and wills if the deceased died after 16 August 2015 and there is a foreign connection.
- Example
Antoine made his will with a notary in France. In the meantime, he has moved to Austria and now wants to revoke his will. Does he have to comply with French or Austrian regulations?
Brigitte works in the Netherlands during the week, but always spends the weekends with her boyfriend in Belgium. She wants to make a will, but is unsure of the legal requirements.
When her father dies, who emigrated to Finland 10 years ago, the heirs, who all live in Austria, wonder whether they can conduct probate proceedings in Austria.
- Practical tip
Not covered by the Regulation are, for example, questions of parentage and relationship, tax matters and matrimonial property law. Here, the applicable law must be examined in each individual case.
What if the habitual residence is not in an EU member state?
What if the habitual residence is not in an EU member state?
The Regulation mainly refers to the habitual residence of the deceased at the time of death. This place determines both the applicable law (if there is no choice of law) and the competent court.
However, under certain circumstances, the courts of a Member State have jurisdiction over the estate even if the last habitual residence of the deceased was outside the EU, namely if
- assets of the estate are located in a member state and
- there is a close relationship to this member state.
The close relationship exists if the deceased (1) had the citizenship of the state or (2) moved away from the state no more than 5 years ago and had his or her habitual residence there before moving away.
- Example
Nils was a Swedish citizen, but had lived in Russia for 10 years. When he died, he left a property in Sweden. Although Nils did not have his habitual residence in a Member State, Swedish courts have jurisdiction.
Julia is Colombian, but lived professionally in Spain for 10 years. From this time, she still has a bank account and a securities account in Spain, which contain a considerable fortune. Two years ago she moved back to Colombia, where she then died. Spanish courts have jurisdiction over the probate proceedings because Julia has assets there and it is less than 5 years since she had her habitual residence in Spain.
- Practical tip
Just because a member state is responsible for the proceedings does not mean that the law of succession of that state must also be applicable! According to the EU Inheritance Regulation, the law of a third country, such as the USA or Turkey, may even be applicable in a member state if the deceased had his or her last habitual residence there.
How is habitual residence determined?
How is habitual residence determined?
The habitual residence is where the deceased had his or her centre of life. This depends on an overall assessment of the social, family and professional circumstances. The habitual residence is in the country with which there is a particularly close and firm connection.
It is therefore irrelevant where the registered main residence of the deceased was. Citizenship is also not decisive. At most, it can be an indication of which country has the strongest ties. Furthermore, the place of death has no influence on the habitual residence, because death can occur suddenly at any place.
- Example
The late Camilla lived in Italy but commuted to France every day for work. Her family, her house and also her leisure activities were all in Italy. She had her habitual residence in Italy.
A retired couple from Germany spends (only) the winter months in Spain in a holiday flat. However, they still have the house in Germany where their family also lives. Their habitual residence is still in Germany.
Dario dies during a short holiday in Croatia. He does not have a habitual residence there, because this requires a certain degree of stability and permanence, which is not given in the case of a holiday.
The demarcation can be difficult, for example, in the case of foreign carers who live most of the time with the persons in need of care and then return to their home country for a short time. Even though the stay in the home country may be less in absolute terms, the social and family ties will be stronger there.
International inheritance law in Austria: Can I choose the applicable law?
International inheritance law in Austria: Can I choose the applicable law?
Yes, this is possible.
A choice of law is advisable if you often move to other countries and your habitual residence therefore changes frequently. In this case, the applicable law and also the competent courts would change with each move. And that, in turn, could have serious consequences, because the legal inheritance quotas and compulsory portion regulations sometimes differ greatly. You can prevent this by making a choice of law.
“Very good, I choose English law, there are no compulsory parts there.”
This is not going to work. You can only choose the legal system of the state to which you belong at the time of the choice of law or at the time of your death. In other words, you can opt out of the law of your country of residence and choose the law of the country of which you are a citizen.
A choice of law is also advantageous if it is unclear where you have your habitual residence, for example because you are a cross-border commuter, work abroad and have a “second home” there. Although you can only choose the law of your citizenship, you can create legal certainty for your heirs.
And if I want to choose a “foreign” jurisdiction?
If you want to choose a foreign legal system because you think there are better regulations in inheritance law there, you would have to move there and establish your habitual residence. If you do not have the citizenship of this state, you cannot choose this legal system in your will.
Is the choice of law subject to formal requirements?
Yes.
The choice of applicable law must be made in the form provided for testamentary dispositions. The choice of law can be made as part of a will and then applies to the will. However, it can also be determined only for itself, in which case it only regulates which law of succession is applicable.
- Example
Emma has acquired a considerable fortune over her lifetime and wants to leave it to her grandchildren in a will. She only wants to leave a small part of it to her husband because she thinks the money is better off with the grandchildren. She wants to choose Czech law for her will because there is no compulsory portion for the husband there. As Emma is an Austrian citizen, she cannot choose Czech law. Czech law would only apply to her estate if she moves and has her habitual residence – i.e. her centre of life! – at the time of her death in the Czech Republic. If she lives in Austria, this is not possible.
Ferdinand often works abroad for longer periods as a fitter. He does not want to make a will because the intestate succession in Austria suits him well. However, he wants to make sure that Austrian law is applied to his heirs after his death and not foreign law. Therefore he makes a choice of law for Austrian law in the form of a testamentary disposition, even though he does not make a “real” will.
Gerlinde makes a will with a notary in Austria without choosing a legal system in it. Two years later she moves to Slovakia, where she remains until the end of her life. Since no choice of law was made in the will, Slovakian law is applicable in the probate proceedings.
International inheritance law: Caution with special regulations
Some states provide for special rules for certain assets such as companies or real estate for family, economic or social considerations. If a state in which these assets are located has such a rule, it applies even if another legal system would actually be relevant. Even a choice of law cannot exclude these special rules.
Examples in the Austrian legal system can be found in condominium law, tenancy law and the law of succession applicable to some farms.
- Example
Laura (German citizen) and her boyfriend Marvin are co-owners of a condominium in Austria, thus forming an owner partnership according to the Austrian Condominium Act. When Laura dies, her share in this flat does not fall into the estate and thus does not go to her heirs. Rather, Marvin becomes the sole owner of the flat (you can find more details about this here). This serves to protect Marvin, because otherwise he would have some co-owner instead of Laura, whom he may not even know (e.g. Laura’s parents; admittedly, Marvin has to pay a transfer price into the estate for the half share). Now, this special rule under residential property law applies even if Laura has made a will and included a choice of law to German law in it.
International inheritance law in Austria: Can the competent courts also be freely chosen?
International inheritance law in Austria: Can the competent courts also be freely chosen?
No.
It is not possible to determine which courts are to have jurisdiction over one’s own estate at some point.
This can lead to the following problem: If the deceased has made a choice of law to the legal system of that state of which she is a citizen, but at the same time did not have her habitual residence there, the courts of that state in which the last habitual residence was must apply the chosen law (from the point of view of the courts: foreign law). This is because despite the choice of law, the jurisdiction of the courts in probate proceedings is based on the habitual residence. Thus, applicable law and court jurisdiction may diverge.
- Example
The deceased Helena chose Austrian law in her will, but her habitual residence at the time of her death was in Poland. In the probate proceedings, Polish courts must now apply Austrian inheritance law.
To avoid this, the parties to the probate proceedings, i.e. the potential heirs, can subsequently agree that the courts of the state whose law is applicable on the basis of a choice of law shall have jurisdiction. However, this is only possible if it is agreed in writing by all parties concerned and only after the death of the deceased.
- Example
Igor’s habitual residence was in Germany, he was an Austrian citizen. In his will he made a permissible choice of law on Austrian law. After his death, his heirs can jointly agree that they want to conduct the proceedings in Austria.
Which legal system applies when making a will?
Which legal system applies when making a will?
For a testamentary disposition (will), formalities must be observed in order for it to be effective.
In international inheritance law, for example, the question could arise as to which law should be used to assess testamentary capacity if the deceased was French, had his habitual residence in Belgium, made the will with a lawyer in the Netherlands and French law was chosen in the will.
However, the question does not only arise with regard to the testamentary capacity, which could be limited, for example, due to dementia, but also with regard to the formal requirements. Here, too, it is important to find out which legal system is applicable in order to know how the will can be drawn up, how many witnesses are required, etc.
Which law governs the contents of the will?
In order to find out the applicable law of succession for the material validity and admissibility of testamentary dispositions, it is based on which law would have been relevant if the maker of the will had died at the time it was made. It therefore depends on where he had his habitual residence at that time; a later move has no influence. It is irrelevant where the will was made. However, if a choice of law was made in the testamentary disposition, the assessment is based on this. (In the above example, French law would thus be decisive, because of the choice of law).
There are special rules for agreements with effects on the estate, which must be examined in each individual case.
- Example
Jan makes a will at a time when his habitual residence is in Hungary. 10 years later he moves to Luxembourg and later dies there. If he has not made a choice of law, the admissibility and substantive validity of the will is governed by Hungarian law because he resided there at the time it was made. The Luxembourg courts must therefore examine the material validity of the will by applying Hungarian inheritance law. On the other hand, Luxembourg compulsory portion law applies because the last habitual residence was there.
Klaudia (Portuguese citizen) makes a will in Portugal and chooses Portuguese law in it. When she dies, she has her habitual residence in Crete. Both the admissibility, validity and everything else are governed by Portuguese law.
Which law governs the formal requirements of the will?
The applicable law for formal requirements, on the other hand, is based on other criteria. Depending on the connecting factor, it can be based either on the place where the will was drawn up, the nationality of the testator, the domicile or habitual residence of the testator or, in the case of immovable property (real estate), the location.
In detail, the regulations are complicated because, depending on whether it is a unilateral disposition or an inheritance contract, an international treaty, the Hague Testamentary Form Convention, or the EU Inheritance Law Regulation are relevant.
- Practical tip
With testamentary dispositions, it is particularly important to pay attention to the formal requirements. If mistakes are made here, the will may be invalid and therefore not applicable. Especially in international cases in inheritance law, it is therefore important to know which formal requirements must be observed.
International inheritance law in Austria: How can I revoke my will?
International inheritance law in Austria: How can I revoke my will?
A revocation or amendment of testamentary dispositions must comply with the relevant formal requirements in each case. In order to find out which formal provisions of which legal system are applicable, attention must be paid to the same provisions as for the establishment of testamentary dispositions (see above). The assessment is thus again based on either the Hague Testamentary Form Convention or the EU Inheritance Regulation.
Difficulties may arise due to the fact that in some legal systems, such as the Austrian, a conclusive revocation is possible by destroying the will. In other legal systems, however, this does not constitute a valid revocation of a will. In order to revoke testamentary dispositions safely, it is therefore also advisable to seek professional advice.
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