Presentation Transcript

1. Preparingforthe EU Succession Regulation Regulation (EU) No. 650/2012 of 4 July 2012 The newsetupforcross-borderestateplanning Luxembourg, 20 January 2014
2. Agenda Scope, Term andLocalApplicabilityofSuccession Regulation Determination ofApplicable Material Succession Law Jurisdiction (Forum) European CertificateofSuccession Advising Clients on Choice of Law in a Luxembourg-German Context
3. Scopeof EU Succession Regulation Determination ofApplicablelaw Determination ofJurisdiction (Forum) Recognition andEnforcementofForeignDecisions in SuccessionMatters European CertificateofSuccession Not covered: Gift andInheritanceTax / Double Taxation Treaty In thiscontextsolelyrecommendationsby EU Commisssionof 2011 (withoutconsequences) Not covered:Matrimonial Property Regimes! From a German perspective, thisis a real issuebecausetheintestatesharesofsurvivingspouseandtheirissueincludingtheirrespectiveforcedsharesareinfluencedbythematrimonialpropertyregimes. The beneficiaries‘ sharesaretobenamed in the European CertificateofSuccessioneventhoughtheparticipating EU memberstatesuse different connectingfactorsfordeterminingtheapplicablematrimonialpropertylaw.
4. Transitionalprovisions (Term) June 2012 Regulation passedby Council of Ministers of Justice August 2012 „Entry intoforce “ 17 August 2015 Applicability Example: August 2013 Codicil April 1980 Will and Testament January 2016 Death of Testator  EU Succession Regulation appliestothewholecaseincluding 1980 Will and Testament
5. LocalApplicability Uniform Law  PrincipallyApplicable in Relation to Non-Participating Countries (e.g. Switzerland, U.K., U.S.A, Monaco…) Recognition andEnforcementofDecisions in SuccessionMatters limited toDecisionstakenbyParticipating Member State, Artt. 59 ff. Succession Regulation ExtraordinaryProvisions on Forum in Participating Member States in casesrelatingto Non-Participating Countries, Art. 10, Art. 11 Succession Regulation Beware:ExistingTreatiescontinuetoApply, Art. 75 Succession Regulation e.g. Consular Treaty between German Reich and Turkey of 28 May 1929 Luxembourg: NoTreaties
6. Agenda Scope, Term andLocalApplicabilityofSuccession Regulation Determination ofApplicable Material Succession Law Jurisdiction (Forum) European CertificateofSuccession Advising Clients on Choice of Law in a Luxembourg-German Context
7. Determination ofApplicableSuccession Law PresentProvisions in German Law and Luxembourg Law Primary ConnectingFactor: Exceptions: International ConflictofApplicable Laws between Luxembourg and Germany: NationalityforMovablesandImmovables, Art. 25 para. 1 EGBGB Choice of Law in Favourof German SuccessionlawavailableforForeignNationals but Limited to German Situate Real Estate, Art. 25 para. 2 EGBGB Renvoi (e.G. Luxembourg National residing in Germany), Art. 4 para. 1 EGBGB Ordre Public. Fraude à la law? Immovable Property: Situs law, Art. 3 para. 2 Cciv Movable Property: Last ResidenceofDecedent No Choice of Law Renvoi Ordre Public. Fraude à la law. Movable Property:Whenever a Decedentresides in a State he orsheisnocitizenof(e.g. German national residing in Luxembourg orviceversa) Immovable Property: German National leaving Real Estate outside Germany
8. Determination ofApplicableSuccession Law EU Succession Regulation (1) Primary ConnectingFactor: HabitualResidence, Art. 21 para. 1 Succession Regulation HabitualResidence (considerations 23 to 25): Consideration 23: „In ordertodeterminethehabitualresidence, theauthoritydealingwiththesuccessionshouldmake an overallassessmentofthecircumstancesofthelifeofthedeceasedduringtheyearsprecedinghisdeathandatthe time ofhisdeath, takingaccountof all relevant factualelements, in particularthedurationandregularityofthedeceased‘spresence in the State concernedandtheconditionsandreasonsforthatpresence.“ In caseofa mismatchbetweeneconomicand personal centersof vital interests(e.g. an employeeliving in onememberstateandworking in another) the private centerof vital interestsshallprevail (consideration 24) Nointentionrequiredtoestablish an habitualresidence (objectivecriterion) IdenticalConnectingFactorforMovableandImmovable Property (noScission) UnclearMeaningofEscapeClausein Art. 21 para. 2 Succession Regulation
9. Determination ofApplicableSuccession Law EU Succession Regulation (2) Choice of Law in FavourofTestator‘s Law ofNationality, Art. 22 Succession Regulation Assumptionof Choice of Law forwillsmadebefore 17 August 2015 Beware: NoAssumption in Cases of Interstate Succession! Example: German National withhabitualResidence in Luxembourg: NomoreMismatchbetween Approach ofAuthorities in Germany and Luxembourg: Primary (default) ConnectingFactor: HabitualResidence Luxembourg Succession Law Choice of Law Option in Favourof German Succession Law as Law ofNationality (Lowerforced Shares ofDescendants, ForcedHeirship Claim ofMonetary Nature only) Whataboutthedroit de prélèvement (righttocompensationwith Luxembourg AssetsifInheritance Share underForeignSuccession Law of Luxembourg Resident Heirsislowerthanunder Luxembourg Successionlaw? In General: Will Participating Member States regarditasagainst Public Policy (ordre public) ifApplicationofForeignSuccession Law leadstolowerForcedHeirshipEntitlements? (Discussedamongstothers in Swedenand in Italy).
10. Determination ofApplicableSuccession Law EU Succession Regulation (3) ExceptionalConnectingFactors Admissibilityand Substantive ValidityofTestamentaryDispositionsotherthan Agreements astoSuccession, Art. 24 Succession Regulation Admissibilityand Substantive Validityof Agreements astoSuccession, Art. 25 Succession Regulation German Joint Testaments are Agreements astoSuccessionwithinthemeaningoftheSuccession Regulation, seeLechner, NJW 2013, 26; Herzog, ErbR 2013, 2, 8; Lehmann, ZErb 2013, 26; otheropinionSimon/Buschbaum, NJW 2012, 2393, 2396; Nordmeier, ZEV 2012, 513. Beware: Even thoughtheSuccession Regulation explicitlyapprovesof Mutual (Joint) Wills, thereis a RiskthatJoint Wills mayberegardedasagainst Public Policy (e.g. in Itay) Formal Validityof a Testamentary Disposition, Art. 27 Succession Regulation Formal Validityof a DeclatationofAcceptanceorWaiver, Art. 28 Succession Regulation Administration of an Estate, Art. 29 Succession Regulation Special Rules imposingRestrictionsconcerningoraffectingtheSuccession in RespectofCertainAssets (but seeconsideration 54: strict Interpretation) Commorientes, Art. 32 Succession Regulation Estateswithout a Claimant, Art. 33 Succession Regulation
11. Determination ofApplicableSuccession Law EU Succession Regulation (4) In Particular: ExceptionalProvisions(Foreign Real Estate andForcedHeirship Claims) AtPresent: AcquisitionofForeign Real Estate in the U.K. orthe U.S. in Order for a German National or a Luxembourg Resident Testator toreduceForcedHeirship Claims ofDescendants (becauseneither English nor U.S. State Laws provideforForcedHeirship Claims forDescendantsorForeignDomiciled Testators) EU Succession Regulation: In the Future Foreign Real Estate ownedbyTestator habitually Resident in Germany or in Luxembourg Governedby German or Luxembourg Law (orSuccession Law validlychosen). Art. 30 Succession Regulation does not providedifferently (seeconsideration 54) But: NomoreForcedHeirshipEntitlementsregardingDomestic Real Estate ownedby an Englishmanor U.S.-American if he orsheincludes a Valid Choice of Law in Favouroftheir Law ofNationality in hisor her Will, seeArt. 34 Abs. 2 Succession Regulation
12. Agenda Scope, Term andLocalApplicabilityofSuccession Regulation Determination ofApplicable Material Succession Law Jurisdiction (Forum) European CertificateofSuccession Advising Clients on Choice of Law in a Luxembourg-German Context
13. Jurisdiction (Forum) General Rule: ExclusiveJurisdictionbyAuthorities in Participating Member State theDecedent was last Habitually Resident in, Art. 4 Succession Regulation IftheDecedent was Habitaully Resident in Non-Participating State then Art. 10 Succession Regulation providesforsubsidiaryJurisdictionwhere Estate Assetsarelocated in a Participating Member State Exception in Casesof Choice of Law Formal Choice-of-Court Agreement, Art. 5 Succession Regulation Informal (but express) AcceptanceofJurisdiction, Art. 7 Lit. c) Succession Regulation Jurisdictionbased on Appearance, Art. 9 in Case of Art. 7 Succession Regulation Jurisdictiondeclinedby Court seised, Art. 7 a) Succession Regulation Forum Necessitatis, Art. 11 Succession Regulation ReceiptofAcceptanceorWaiveroftheSuccession, Art. 13 Succession Regulation
14. Agenda Scope, Term andLocalApplicabilityofSuccession Regulation Determination ofApplicable Material Succession Law Jurisdiction (Forum) European CertificateofSuccession Advising Clients on Choice of Law in a Luxembourg-German Context
15. European CertificateofSuccession Formalized European CertificateofSuccession, available in all Official Languagesofthe EU, Art. 67 para. 1 s. 2 Succession Regulation withverybroadContents, Art. 65 para. 3 Succession Regulation Legal Effectsof European CertificateofSuccession PresumptionofAccuracy, Art. 69 para. 2 s. 1 Succession Regulation, Includingboth Statements of Fact and Legal EntitlementsofPersonsnamed Change orCorrectionof Official Registers shallbePossibleBased on the Information givenwithinthe European CertificateofSuccession, Art. 69 para. 2 s. 2 Succession Regulation ProtectionofGood Faith, Art. 69 para. 3 and 4 Succession Regulation NoGood Faith if a Person positivelyKnowstheCertificateisIncorrectorifhisor her Ignoranceresultsfrom Gross Negligence (Standard of Gross Negligence not definedwithintheSuccession Regulation). Limitation ofValiditytosixMonthsby Default, Art. 70 para. 3 Succession Regulation NoWithdrawalof European CertificateofSuccessionevenif Authority realizesIncorrectnesofCertificate, Art. 71 Succession Regulation National CertificatesofInheritance (e.g. German Erbschein) canbeappliedforif National AuthoritieshaveJurisdiction. Subsequently, such National CertificatecanbeAccepted in otherParticipating Member State subjectto Art. 59 Succession Regulation
16. Agenda Scope, Term andLocalApplicabilityofSuccession Regulation Determination ofApplicable Material Succession Law Jurisdiction (Forum) European CertificateofSuccession Advising Clients on Choice of Law in a Luxembourg-German Context
17. New Area of Legal Advice: Decision on Choice of Law Choice of Law alwaysAvailableif Testator holds a Nationalityof a State he is not Habitually Resident in (i.e. any Testator living in a Foreign State, any Testator with Dual oreven Triple Nationality). Nolimitationto Choice in Favourof „effective“ Nationality German Succession Law: ForcedShare ofDescendants: ½ theirintestateshares ForcedHeirshipEntitlementonlyMonetary Claim ReceivedDonationsonlyCreditedagainstForced Share if so Agreedatthe time ofDonation Inter-vivosWaiverofForcedHeirshipRightspermissible Executorisentitledtodisposeof Estate Assetsin theHeirs‘ stead Permanent Executorshipavailable, e.g. in order totakecareofHeirswhoareMinors Other criterion: Speed and Luxembourg Law: Forced Share ofChildren = ½ oreven ¾ or Estate depending on theirnumber ForcedHeirsareentitledto Seat in Community ofHeirs ? No inter-vivosWaiverofForcedHeirshipRights ExecutoronlysupervisestheHeirs No Permanent Executorshipavailable Foreseeabilityof Court Decision?
18. Summary The EU Succession Regulation is a Grand andBold Piece of Legislative Reform Practitioners must adopttheir Practice totheRequirementsandEffectsoftheSuccession Regulation now. ManyDifficultiescurrentlyassociatedwith Cross-Border Estate Planning will bemediated, yetnew Problems will arise. ManyIssues will onlycomeupduringtheyearstocome, so Casesof Cross-BorderSuccessions in theyears after 16 august 2017 will besubjecttoincreaseduncertainty. Legal AdvicewithRegardtothe Choice of Law will play a majorRolewhenadvising International Clients. Pros andConsoftherespective Substantive Laws andthe Different Forums must beWeighed . It will not SufficeanyLongertotrytoAvoid an International Conflictof Laws. The Negotiationsbetweenthe different Legislative Bodiesofthe European Union leadto Major ChangestotheDraft Regulation in Summer 2012. AnyPublicationpublishedbeforeAutumn 2012 isthusOutdated.
19. Thankyou! Attorney-at-Law (Germany) Dr. Daniel Lehmann, TEP Partner Baker Tilly Roelfs Nymphenburger St. 3b 80335 Munich Germany phone: + 49 (0) 89 55066-295fax: + 49 (0) 89 55066-130 cell: + 49 (0) 172 8294626 daniel.lehmann@bakertilly.de www.bakertilly.de