What changes have been made to the law applicable to succession and are there options for choosing the law?
From a German perspective, the Succession Regulation represents a system change. The law of succession that applied until August 17, 2015 was based on nationality when it came to the law under which inheritance was to take place. Under the new regulation, the last habitual residence of the deceased is decisive. A German with a property in Spain but who lives in France will inherit according to French law.
However, the Succession Regulation allows for a choice of law: a person can choose the law of the country to which they belong at the time of the choice of law or at the time of their death for the succession. A person who has several nationalities can choose the law of one of the countries to which they belong at the time of the choice of law or at the time of their death. The choice of law option allows a German testator to choose their home law when planning their estate. The choice of law option thus takes account of the interests of German testators who - regardless of where they will reside in the future - prefer the application of their home law.
Which law of succession can be chosen?
The choice of law is limited to the home law. A testator can only choose between different laws if he or she already has several nationalities at the time of choosing the law or will change his or her nationality in the course of his or her life.
This means that a testator cannot choose the law of succession of their current habitual residence. For example, if a French person has been living in Germany for years, they can still only choose French law, not German law. However, if he moves his habitual residence to Austria before his death, he will inherit according to Austrian law if he has not made a choice of law.
Form: How do you make a choice of law?
The choice of law can only be made in a testamentary disposition. The testator must comply with the strict form of the testamentary disposition. The requirements for testamentary dispositions are governed by Article 27 of the Succession Regulation and the Convention on the Form of Wills, Article 26 (as amended) of the Introductory Act to the Civil Code.
If the testator does not make an express choice of law, it can still result from the provisions of a disposition of property upon death. This is referred to as an implied choice of law. The requirements for an implied choice of law are not regulated by the Succession Regulation. By interpreting a disposition of property upon death, the assumption of an implied choice of law can be considered if the testator refers in his last will and testament to special provisions in the inheritance law of the state to which he belongs or mentions the inheritance law of this state in another way.
Recommendation: Check the desired law of succession and plans for future residence
Whether an express choice of law makes sense depends on whether the testator wishes his or her home law to apply to the succession and where he or she has his or her habitual residence. If the testator with German nationality has his habitual residence in Germany, the choice of German home law is not necessary if the habitual residence in Germany is maintained until death. In this case, the deceased will inherit according to German inheritance law, the law of the state of their habitual residence, without a choice of law.
It is therefore advisable to carefully consider whether you can rule out the possibility of transferring your habitual residence to another European country at some point. If the testator is considering living outside Germany for a longer period of time and wants to ensure that he or she will always inherit under German law after his or her death, he or she should make a choice of law. The same applies if they cannot rule out the possibility of transferring their habitual residence to another country.
The declaration of choice of law should include information on nationality and habitual residence as well as the choice of German law for succession upon death and for questions of legal validity.