4 maggio 2020

THE CASE
How to draft two wills which regulates the estate of two spouses ( both of American and Italian nationality) with moveable and immoveable assets in the two different Countries as follow:
Moveable estate: Italy, USA
Immoveable estate: one house in Italy two premises in USA
I was also informed that many of moveable assets deposited in U.S. banks are held in joint tenancy
I was asked about the possibility to draft two wills (one for EU assets, the other for U.S. assets), which law will regulate the different estate and what happened at the moment of death for managing the heirship and the taxation issues in the different countries.
Finally I was also required to exam the situation in case of simultaneous death (or commorienza in Italian)

INTRODUCTION

Which will be the applicable law in the different cases, if it is possible to make a choice of a law different by the law criteria, if different legislations should be applied to the different estate and the different kind of properties.
Here the different cases
1) Commorienza or simultaneous death
2) Death of one of the spouse in Italy
3) Death of one of the spouse in U.s.
4) Death of one of the spouse in a different country

APPLICABLE LAW

Different scenarios from an Italian point of view not being a U.S. attorney or authorised to give U.S. legal advice.

1) Simultaneous death.
According Italian Civil Code art. 4 “when a legal effect (eg. If anyone can inherit instead of the other ..) depends from the survivorship of one person in respect of another one and it is not possible to ascertain who among the two predeceased, all are considered died at the same time.” It is a presumption of simultaneous death which do not affect your two wills in which you have already regulated and disposed of the estate should happen this event. The applicable law will be the same as better explained below (the law of habitual residence of the deceased ( I assume you continue to live together in the same country and/or you will have with U.S.A. manifestly closer connections).

2) Death of one spouse in Italy

The European Regulation 2012 n. 650 simplifies the rules and gives each citizen the possibility to choose the legislation he/she wishes to apply when the time comes. The regulation offers three options:

– The principle: application of the law of the State in which the deceased will have his/her habitual residence at the time of death, even if this is the law of a State that is not a member of the European Union. A single law will govern the whole succession.

– The exception: when, exceptionally, the circumstances present a situation whereby, at the time of death, the deceased had manifestly closer connections with another State, the prevailing law will be that of this State.

– The option: possibility to choose the law of one of the states whose nationality one possesses. This option is set out in a declaration in the form of a ‘disposition of property upon death’.

According article 20 the applicable law according article 21 as above has an universal applicability, which means that if the Italian law apply, then this will apply even in Countries outside the EU.

The Italian succession follows (differently from France, Uk, Usa) the principle of unity of succession, therefore Italian law will regulate all the estate included all the overseas estate.

3) Death of one spouse in U.s.a.

The applicable law is the American (Country of death) Law; it could be the Italian law if you had chosen the Italian law in the will ( this is US law matter, to check if it is possible to choose and follow another law in the will).

In any case, according U.S. law the principle of unity of succession does not apply, so a renvoi applies by virtue of principle of lex rei sitae on the matter of the immoveable assets in Italy.

4) Death of one spouse in a different country

Assuming the spouses will not establish a new residence in a country different by U.S. or Italy, it could happen a death in a third country, or in a country different of your habitual residence (it can be the case you had been living for year in Italy and there you had the habitual residence, but in the last months you decide to move to another third country or in Usa to have better medical care) In this case it will apply the exception n.2) of EU Regulation 650/2012.

THE DIFFERENT IMPACT OF THE DIFFERENT APPLICABLE LAWS TO THE CASE: WHAT HAPPENED AFTER ..

1) the impact of the different applicable laws is mainly provided by the forced heirship rules which has a strength impact in Italian law. The Italian law provides in any case it is not possible to dispose of more than 50% of the estate where married without children..

The U.s law should not provide this sort of limitation.

The main difference of the application of the two different legislations are mainly in the practical management of the estate.

As you know in Usa it is mandatory to appoint in the will two executors, who will be entitled with the grant of Probate for distributing the estate under control of the local Probate Court.

The estate does not pass automatically to the heirs, but only after the closing of the Probate proceeding.

In Italy we have in any cases to submit the “Dichiarazione di successione”, pay taxes, but the heirs are automatically entitled to the heirship.

In case of an “Italian succession” (regulated by Italian law) in theory the Italian law is applicable to all the estate wherever located (principle of unity of succession); therefore an Italian will should regulate all the matters and appoint the executors, even if according Italian law the appointment of an executor is not mandatory and not common.

In the cross-border succession which involves an estate in another country my advice is to appoint one in any case preferably able to manage also the foreign procedure.

In the case of Italian Succession we will have an ancillary probate in U.S.

In case of a U.S. Probate case the applicable law will be the U.S. law to all moveable assets (even those deposited in Italy or everywhere in Europe) and the Italian Law to the immoveable assets in Italy.

We will have a Probate case with an executor appointed there who will be granted to administer the estate, pay taxes and make the final distribution. Naturally the executor or the heirs directly must appoint anyone in Italy with a full power of attorney to manage the Italian estate. In Italy it is in any case necessary to submit a “dichiarazione di successione”

PRACTICAL ISSUES, ONE WILL, TWO WILLS, SOLUTION.

In all the cross-border succession/probate cases, many troubles could arise in the practical management of the estate. Many documents are to be translated and apostilled, the banks in Italy request a pile of certificates, affidavits, and signatures to distribute the money or to transfer the ownership of shares, bonds, funds. Even the procedure to register the change of ownership in the land registry is not straightforward, in U.s. all the documents are to be transmitted to the Probate Court and for my experience it is quite difficult to have a quick assessment of the Federal taxes and contact IRS.

This the reason because you should consider a due inheritance planning to avoid and reduce all the pitfalls of a cross-border proceeding.

All the legislations provide the validity of a will giving disposition on the capacity to dispose, the formal requirements of the documents, the formality, the revocation clause etc. There are not many differences between the different legislation on these points, but this is matter of Italian Public Notaries or Probate lawyers.

ONE WILL OR TWO WILLS

It is possible or not to draft two different wills one for the Italian Estate, one for the U.S.estate?

The answer is not affirmative (the Italian Notary already confirmed the answer) but …….

It is true that the last will revokes all the previous will, it is true that all not included in a will is to be distributed according Intestacy rules.

In my professional experience, in all the cross border cases followed I generally found that it is quite difficult that an American, an English or an Australian professional (a lawyer or the executor or the administrator of an estate appointed) was very committed to deal with Italian Issues; I can say in all the cases I had, they gave me a power of attorney in Italy to deal with all the Italian issues. In many cases I had difficulty to involve them in distribution of the Italian estate.

On the other hand it is very rare to find any Italian professional deal with American Probate case.

It is very common that each professional and each Country regulate the matter independently by the principle of the applicable law.

POSSIBLE SOLUTIONS

A) INHERITANCE PLANNING

There are many solutions to prepare a fair and quick distribution of the inheritance, or more exactly, avoid that some assets could enter in the Succession/probate procedure.

I was told that you have already opened Payble on Death Bank Accounts, or Life Policy in order to exclude assets by the estate and let that the right of survivorship applies.

This works out for U.S. law, but I am wondering if these assets must be declared when the “dichiarazione di successione” is submitted, or on the contrary not included because they are not included in U.s.estate and are out of the succession according U.s. Law.

The joint accounts typically carry rights of survivorship because of their very nature.  Normally U.S. bank accounts allow both holders to access the account without the other’s signature during their lifetimes.  This continues after one holder dies and the bank can’t intercede with or overrule this right (except where the account is used to receive US social security payments.
The nature of the account doesn’t change because one of the holders died.  At death, ownership of the entire account vests automatically with the survivor. The survivor generally only has to provide the institution with a copy of the death certificate to have the deceased’s name removed from the account.   This should be checked with the institution however.
In Italy the cash on a bank forms part of the Italian Estate “patrimonio ereditario” and therefore subject to inheritance tax (if a transfer to the spouse or children subject to 4% tax above the Euro 1 million threshold).   So technically it should be declared, even if the dichiarazione di successione may not be required to secure the removal of the deceased from the bank account

B) TWO WILLS

I already draw your attention on the different applicable law in the cross-border succession. The Italian law is very strength in succession matter; the freedom to dispose and to make a will is limited by forced heirship rules, by the prohibition to have agreement in succession matter, invalidity of a mirror will or a joint will.

According probate law in common law countries (exceptions only in the Catholic tradition countries as Scotland, and Louisiana) the testator is totally free to dispose his own estate without any restriction, and it is possible to dispose in a will only of a part f the estate referring and making a choice of law of the country even without habitual residence, and basically allowing that another previous will can continue to be valid on the foreign estate. This will be matter of exchange of information with your American lawyer, but if, as I believe, it is possible to make an “American” will without making invalid a previous Italian will this is the solution.

Have a look to this famous “American” will

Io, Luciano Pavarotti, residente in Italia, dispongo, rendo pubblico e dichiaro che questo è il mio speciale e limitato Ultimo Testamento, da essere conosciuto come il mio ‘Testamento Americano’. Il presente Testamento Americano si applicherà solo ai beni costituenti il mio asse ereditario americano, come in appresso definito, e non revoca, nè interferisce con le disposizioni di cui al mio Testamento del 13 giugno 2007 che concerne i beni non facenti parte del mio patrimonio americano.

He made an Italian will on an Italian estate two months before disposing of his Italian Estate saving the forced heirship rules there.

At the end of the American will it was the appointment of executor (his second wife) the Choice of New York law and a closing clause which provide the rules of interpretation of the will according English language in case of conflict (the will was drafted in double language).

The matter to investigate and discuss with an U.S. lawyer is to understand if, by U.S. law (each State has one different) it is possible to have a scenario as above with that kind of clause I LP dispose and declare this is my special and limited last will, the “American will”. This will is applicable only to the American estate and will not revoke, neither intermeddle with the Italian will.

Avv. Carlo Bottino