Cross-border estates involving Australia and Italy raise a question which is frequently overlooked in conventional estate planning:
Which law will actually govern the succession?
The answer is not necessarily determined by where a Will was executed, where the deceased was born, or even where the relevant property is situated.
For Australian citizens with assets or residence in Italy, Regulation (EU) No 650/2012 (the “EU Succession Regulation”) provides the central private international law framework for determining the law applicable to the succession.
Its interaction with Australian succession law can be particularly significant where the estate involves Italian real property, permanent relocation to Italy, blended families or testamentary arrangements which differ from the Italian rules of forced heirship.
Habitual Residence and the Applicable Succession Law
Article 21(1) establishes the general rule that the law applicable to the succession as a whole is the law of the State in which the deceased had their habitual residence at the time of death.
The concept requires a factual assessment rather than merely consideration of formal residence or nationality. Recital 23 requires an overall assessment of the circumstances of the deceased’s life during the years preceding death and at the time of death, including the duration and regularity of their presence in the relevant State and the conditions and reasons for that presence.
This can produce important consequences for Australians who relocate to Italy.
An Australian citizen may retain Australian nationality, Australian assets and an Australian Will, but nevertheless become habitually resident in Italy. In the absence of another applicable rule under the Regulation, Italian succession law may consequently become the law governing the succession.
The question whether an Australian Will is formally valid must therefore be distinguished from the separate conflict-of-laws question of which substantive law governs the succession.
Professio Iuris under Article 22
Article 22 introduces one of the Regulation’s most important provisions.
A person may choose the law of the State whose nationality they possess at the time of making the choice or at the time of death to govern their succession.
Where the person possesses multiple nationalities, the law of any State of nationality may be selected.
The choice must be made expressly in a declaration in the form of a disposition of property upon death or be demonstrated by the terms of such a disposition.
Critically, Article 22 refers to a choice of law governing the “succession as a whole”.
The Regulation therefore adopts a principle of unity of the lex successionis, rather than permitting the succession law to be selected independently on an asset-by-asset basis.
Recital 37 reinforces this principle: the applicable law should govern all property forming part of the estate, irrespective of the nature of the assets and regardless of whether those assets are located in a Member State or a third State.
For an Australian national with an Italian connection, Article 22 therefore raises potentially significant questions concerning the relationship between Australian and Italian succession law.
Italian Forced Heirship and Article 23(2)(h)
One of the most significant areas of interaction concerns the Italian system of forced heirship (successione necessaria).
Italian law protects certain categories of heirs (legittimari) through mandatory reserved shares (quote di legittima). Depending upon the family composition, the surviving spouse, descendants and, in certain circumstances, ascendants are entitled to a reserved portion of the estate.
This represents an important difference from Australian succession systems and can become particularly relevant in estates involving blended families, children from previous relationships, second marriages or unequal testamentary distributions.
The EU Succession Regulation expressly addresses this issue.
Article 23(1) provides that the law determined under Article 21 or Article 22 governs the succession as a whole.
More significantly, Article 23(2)(h) expressly includes within the scope of that law: “the disposable part of the estate, the reserved shares and other restrictions on the disposal of property upon death” together with claims which persons close to the deceased may have against the estate or the heirs.
Accordingly, the applicable lex successionis determines not merely who inherits, but also the extent to which testamentary freedom is restricted by reserved-share rules. For Australian citizens connected with Italy, this provision can therefore have substantial consequences.
An analysis cannot simply assume that Italian legittima applies because an asset is situated in Italy. Equally, the selection of Australian law should not be described as eliminating all potential claims by family members: the relevant Australian succession legislation, including applicable family provision regimes, must itself be considered.
The correct inquiry is which legal system governs the relevant succession issue under the Regulation.
Australia as a Multi-Law State: Article 36
The application of Article 22 to Australian citizens presents an additional technical difficulty.
Australian nationality is national, whereas substantive succession law is principally State and Territory based.
New South Wales, Queensland, Victoria and the other Australian jurisdictions maintain distinct succession legislation. The question therefore arises as to which territorial Australian law is engaged when the Regulation designates Australian law.
Article 36 specifically addresses States comprising several territorial units, each having its own rules of succession law.
Under Article 36(1), the internal conflict-of-laws rules of that State determine the relevant territorial unit whose succession law applies.
Where such internal rules do not determine the issue, Article 36(2) provides subsidiary connecting rules. In particular, where the applicable law is determined by reference to nationality, Article 36(2)(b) refers to the law of the territorial unit with which the deceased had the closest connection.
Accordingly, the relationship between Article 22 and Australian succession law requires a more sophisticated analysis than simply equating Australian nationality with the law of the Australian State in which a Will happens to have been executed.
The interaction between nationality, Australian internal conflict rules and Article 36 should therefore be examined whenever an Australian law election is contemplated in an Italian-connected estate.
Renvoi and Article 34
A further technical consideration arises because Australia is a third State for the purposes of the Regulation.
Article 34 provides for renvoi in certain circumstances where the Regulation designates the law of a third State.
However, Article 34(2) expressly excludes renvoi where the applicable law has been chosen pursuant to Article 22.
This distinction is important in Australia–Italy succession matters. Where Australian law results from an effective professio iuris, the renvoi mechanism under Article 34(1) does not apply.
This should not, however, be confused with the separate Article 36 analysis required to identify the relevant territorial legal system within Australia.
Australia–Italy Cross-Border Succession
Regulation (EU) No 650/2012 creates a sophisticated conflict-of-laws framework for international successions.
For Australian citizens, its application requires an additional level of analysis because Australia is both a third State for the purposes of the Regulation and a legal system in which substantive succession law is principally determined at State and Territory level.
The interaction between habitual residence under Article 21, professio iuris under Article 22, the scope of the applicable law under Article 23, Italian forced heirship, renvoi under Article 34 and Australia’s multi-unit legal system under Article 36 can materially affect the treatment of an Australia–Italy estate.
The existence of Italian assets or a client’s relocation from Australia to Italy should therefore be considered within the broader private international law framework applicable to the succession.
Fiorino & Associates advises private clients and Australian law firms on Italian succession law and the private international law aspects of Australia–Italy estates.
We work alongside Australian succession and estate planning practitioners where specialist Italian and EU law advice is required in matters involving Italian assets, relocation to Italy, Italian succession law, forced heirship and Regulation (EU) No 650/2012.
This article provides general legal information only and does not constitute legal advice. The applicable law and succession consequences depend upon the individual circumstances of each estate.
