As a refresher, the Regulation came into effect on August 17, 2015, and
applies to all European Union member states with the exception of the U.K.,
Ireland, and Denmark, each of which decided to opt out.
Although it is an EU regulation, it can have significant impact on
Canadians with ties to EU member states. That’s why it is important to
understand and get proper advice on how it operates and how it can be
beneficially applied for Canadians doing their estate planning.
As a brief overview, the Regulation tries to harmonize the law to govern
succession on death so that one law will apply – generally the law of the
deceased’s “last habitual residence.” It does not cover tax or family law
and is restricted in scope to passing assets on death.
If a person has a nationality different from their place of last habitual
residence, they have the option to choose instead the law of their
nationality to apply to their succession. That’s why it’s so important for
Canadians to understand that if they are also citizens of Canada, they have
the option to make a choice of law in their will so that their local law
will apply, and not the foreign law of the European member state they are
In a federal country such as Canada, the Regulation provides that if
succession matters are not governed at the national level, the choice to be
made is the jurisdiction with which you have the closest connection. In
Canada, succession matters are governed by each province or territory.
Choice of law requires choosing the laws of Canada, and the law of the
province or territory with which you have the closest connection.
For Canadians with a vacation property abroad, such as in France, Italy,
Portugal or Spain, it is important to take these considerations into
account in your planning. These jurisdictions do not allow for testamentary
freedom on death. You cannot, in general, leave all of your assets just to
your spouse if you have children, and instead there is a mandatory scheme
of distribution in favour of spouse and children called “forced heirship.”
To avoid this result, a Canadian with a vacation home in one of those
countries can choose the law of the province or territory they have the
closet connection with to apply, for example the law of Ontario or British
Columbia. Likewise, a Canadian living in an EU member state and habitually
resident there can choose the law of the Canadian province or territory
they have the closest connection with, so that the local law of the EU
member state will not apply.
Slowly, on a practical level, practitioners including lawyers and notaries
in EU member states, are coming to terms with the intricacies and everyday
application of the Regulation, and the body of professional literature and
professional education on the topic is evolving and growing.
The first case dealing with the Regulation from the Court of Justice of the
European Union was just reported last fall in October 2017, dealing with a
Polish national resident with real property in Germany, who wished to have
Polish law apply to govern succession of her German real property. The
issue arose of how, if at all, German succession law might restrict her
choice of law, and the scope of the Regulation in that regard.
A recent case of notoriety involving the Regulation concerns the estate of
celebrity French rock singer Johnny Hallyday, a French citizen who died in
December 2017, leaving two children from a former marriage.
Johnny left his estate to his fourth wife and two adopted children under
his California will. His French children from a prior marriage are
asserting that he was habitually resident in France at his death, and
therefore French succession law should apply, under which they would be
entitled to a forced share of his large estate.
They recently obtained a French court order freezing his estate’s French
assets. His widow takes the position that at his death he was habitually
resident in California, and that California law should be referred to
determine succession to his property. The case will be interesting in terms
of determination of his habitual residence. Surprisingly, the Regulation
contains no definition for this term, which is one of the criticisms that
has been made of it.
For anyone who believes they may be impacted by the Regulation, it is
important to get proper legal advice. With growing mobility of people and
assets, when it comes to estate planning, it can no longer be done in a
Margaret O’Sullivan is the principal of the Toronto-based trusts and estates law firm
O’Sullivan Estate Lawyers. She practices exclusively in the areas of estate planning, estate
litigation, advising executors, trustees and beneficiaries, and
administration of trusts and estates. This article originally appeared
O’Sullivan Estate Lawyers blog. Reprinted with permission.
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