It is increasingly common for us to settle in another country, for job reasons or perhaps to enjoy a warmer climate in the autumn of our lives. If you do, it is a good idea to keep track of inheritance law in the country you live in, say our family law attorneys Ann Engwall and Ulrika Didon Kajerdt.
When moving abroad, it is common to have carefully gone through the tax consequences of the move, as they have great economic significance. But it is much more rare that we see people researching the family law consequences when moving abroad, even though these can also have major, undesirable consequences.
Below is a brief summary of what Swedish legislation looks like when it comes to inheritance in international situations.
When a person dies, they may, for example, be a citizen of Sweden, but has moved and is resident in Spain at the time of their death. The heirs can be in different countries and the deceased’s property, such as real estate and bank funds, can be scattered around the world.
This, in turn, could lead to conflicting decisions being made in different countries, or to the death estate management becoming very expensive. To make it easier for relatives to resolve all issues concerning the inheritance in one and the same country, the EU has adopted the so-called EU Regulation on Succession and Wills.
The Regulation does not regulate how the deceased’s assets are to be distributed, but talks about which country’s law is to be applied in the distribution of inheritance and other matters concerning the estate. Rules in the Swedish Inheritance Code, for example – where we find provisions on who inherits, children’s reserved shares, spouse’s inheritance rights, etc. – remain unchanged.
The Regulation entered into force in August 2015, applicable in all EU member states except Denmark and Ireland.
Instead of each EU country having its own rules, the countries have agreed on a common set of rules. Before 2015, each EU country had its own legislation on which country’s law applied if a foreign national died in the country.
According to Swedish regulations at the time, for example, citizenship governed which country’s law was applied, while other countries might have as a decisive factor where the deceased had his or her permanent residence. In these cases, the countries’ laws were contradictory in that both countries pointed out their own laws as applicable to the distribution of inheritance.
The situation regarding the excepted EU states mentioned above has since been rectified, but the problem still remains with regard to other countries in the world, with which we have no agreement.
Which country’s laws apply?
The main rule is that the law of the country where the deceased resided must be applied to the inheritance – where you have your permanent residence. This should not be confused with owning a home abroad but living permanently in Sweden. In these cases, you are not covered by the Regulation on succession and wills.
If the deceased resided in Sweden at the time of their death, Swedish law must be applied, and if the deceased resided in Spain, Spanish inheritance law must be applied. This applies regardless of the citizenship of the deceased. If you move permanently from Sweden to Spain or France and die there, then Swedish law regards Spanish or French inheritance law as valid for the inheritance in its entirety.
The designated law governs the inheritance of all assets no matter where in the world they are located.
By moving to a country that, for example, applies full freedom of testation and does not have inheritance protection for children (reserved shares), the consequence can be that the children inherit nothing.
In some cases, residence can be difficult to determine, such as where the deceased has spent half the year in another country, or where they have lived and worked in one country during the week but lived with the family in another country on the weekends. In these cases, factors such as the family’s residence, the deceased’s main interests and social life can be decisive for determining the place of residence.
Choose a law
The Regulation on succession and wills, however, allows you in your will to choose the law of your country of citizenship for the distribution of inheritance instead of the law of the country of residence. It is not possible to choose the law of any country other than the country of citizenship. This choice of law can only be made in a correctly drawn-up will. If you as a Swedish citizen move to Spain, for example, you can choose to let Swedish inheritance rules continue to govern your inheritance.
Please note, however, that the main rule is that the procedure itself must take place in the country of residence, i.e. that a Swedish estate registration and succession must be conducted in Spain and any disputes must be decided in a Spanish court that applies Swedish law.
Law choice not obvious
It is not obvious that you should always automatically choose your home country’s law when you move abroad. You may instead have your wishes about the distribution of the estate fulfilled by the law of the country of residence and then have no need to mix in the inheritance rules of your home country. A recommendation is to familiarise yourself with your new country’s regulations before a possible choice of law is made.
If you have moved to a country that is not affiliated with the Regulation, England for example, and made a Swedish choice of law in a will, there is no guarantee that the country recognises this choice of law, so the inheritance situation must be resolved there.
If you have drawn up a formally valid Swedish will before you move from Sweden, it is still a valid document. If after it is drawn up you settle permanently in another EU country – and the will does not contain a Swedish choice of law – the wording in the will may conflict with any mandatory legislation in the new country of residence, whose law will then be applied to the disposition of inheritance. You should therefore always consult with a local lawyer about what applies in the new country.
It is important to point out that the Regulation on succession and wills does not cover inheritance tax issues: it is not possible, as a resident abroad, to choose Swedish inheritance legislation and expect that the inheritance tax disappears due to Sweden not having inheritance tax. Inheritance taxation follows other rules.