January 15 2015 Martin Aquilina, Business Lawyer
Some Canadians follow their dream of owning a property (or multiple properties) and living in Europe upon retirement, whether it’s that beautiful villa in Tuscany by the wineries or that home in Oia with its stunning view, or even both. Chances are that in your Will, you have not stated which law will apply to your estate because you assumed that Canadian law will apply. Even if you did have a fleeting thought about it, your lawyer would likely not have expressly addressed the question since choice of law clauses are not very common in Canadian Wills. However, it is not always the case that Canadian law will automatically apply to the entirety of an estate spread across multiple jurisdictions. The question is then: which country’s law will govern in our example: Canadian, Italian, or Greek law? EU Regulation 650/2012[i], (the “Regulation”), which came into force on August 17, 2015, reduced some of the uncertainty surrounding that determination.
The new Regulation is of special interest to Canadians under certain circumstances including:
- Canadians who have “habitual residence” in an EU Member State
- Canadians who live in Canada but have assets in EU Member State(s)
The Regulation is applicable to successions (estates), whether testate (a valid Will exists) or intestate (there is no Will or the one that exists is invalid) in all EU Member States except the United Kingdom, Ireland, and Denmark.
Here are some of the Regulation’s salient points:
- The term “habitual residence” is not clearly defined. Instead, a number of factors such as the time spent in an EU Member State is used to determine whether the deceased had a habitual residence in an EU Member State.[ii]
- Jurisdiction to rule on the estate belongs to the courts of the EU Member State in which the deceased had habitual residence.[iii]
- For an individual who was not a habitual resident of an EU Member State at the time of his/her death but had assets located there, the courts of that Member State could still have jurisdiction if that individual had the nationality of that Member State or if that individual was a habitual resident of that Member State in the past 5 years.[iv]
- The law of the State where the deceased had his/her habitual residence will apply to the estate as a whole unless expressed otherwise.[v] The use of the term “State” rather than “Member State” suggests that the chosen law could be that of a non-EU country.
- An individual can choose to have the law of the State of his/her nationality apply to the estate as a whole.[vi] Again, the term used is “State” and not “Member State”. Thus, the chosen law could be from outside the EU.
For Canadians who have habitual residence in an EU Member State:
By default, when no valid choice of law is made in your Will, your estate will be subject to the jurisdiction of the courts of the EU Member State where you habitually resided. The law of that same Member State would arguably apply to your estate as a whole, including assets that are outside of the EU. However, Article 22 of the Regulation would validate a choice of law clause in favour of the laws of a Canadian province, provided that the testator/trix is a Canadian citizen, even though the EU Member State where the deceased had his/her habitual residence will have jurisdiction over the matter. Thus, a Canadian legal expert may be needed to prove and explain Canadian laws to the Court.
For Canadians who live in Canada but have assets in an EU Member State(s):
For Canadians who live in Canada, the law of the Canadian province where they habitually reside at the time of their death will govern the estate.[vii] Depending on the circumstances, an EU Court could have jurisdiction. However, real estate located in an EU Member State will normally be subject to the jurisdiction and law of that Member State.[viii]
The next step
The new Regulation reflects a move towards uniformity of rules surrounding successions in the EU, although it remains to be seen how it will actually operate in tandem with each Member State’s own legislation. With the new rules in place, Canadians with a connection to the EU, whether it is through ownership of assets or actual habitual residence in the past five years, should consider amending their existing Will or drafting a new Will. This is especially important if you want to maximize the chances that your estate as a whole will be governed by Canadian law and settled smoothly.
For more information on the above, call/email our COO + Business Lawyer, Martin Aquilina at email@example.com or + 1.613.747.2459 x 308.
[i] Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession.
[ii] Recital 23 of the Regulation.
[iii] Article 4 of the Regulation.
[iv] Article 20 of the Regulation.
[v] Article 21 of the Regulation.
[vi] Article 22 of the Regulation.
[vii] Succession Law Reform Act, RSO 1990, c.S.26, s.36(2) which, provides that: “Subject to other provisions of this Part, the manner and formalities of making a Will, and its essential validity and effect, so far as it relates to an interest in movables, are governed by the internal law of the place where the testator was domiciled at the time of his or her death”.
[viii] Ibid at s.36(1).
This article is for informational purposes only and does not constitute legal advice. If you wish to discuss your issue with a lawyer, contact Martin today. 613-747-2459 ext.308, firstname.lastname@example.org