Trust quarterly review
22 June 2017 Issue 2 Jan-Henrick Frank, Jerome Synold and Steffen Leithold

Election fever

A determination of the law applicable to US-German estate matters under the European Succession Regulation

Abstract

  • This article illustrates the German conflict-of-laws rules in force prior to 17 August 2015, the new conflict-of-laws rules, and the impact on estate planning. Although this article focuses on Germany, the new rules will be applied by the majority of European countries.
  • For deaths occurring on or after 17 August 2015, German probate courts apply the succession laws of the last habitual residence of the decedent. As an exception to the general rule, German courts apply the succession laws of Germany with regard to immovable property situated in Germany of any decedent dying domiciled in the US.
  • A US citizen may elect the law of the US jurisdiction they are most closely connected to. By electing US law, a US citizen may avoid German forced-heirship rules.
  • Germany recognises the validity of the majority of foreign wills.

 

The conflict-of-laws rules regarding succession matters applied by most European countries1 have changed dramatically for decedents with a date of death occurring on or after 17 August 2015. For many estates, the applicable law has changed.

Deaths before 17 August 2015

No treaty exists between Germany and the US regarding succession matters.2 Thus, German and US courts apply their national rules when determining the applicable law. German probate courts revert to a choice-of-law analysis. Such analysis generally results in the application of the law of the country of which the decedent was a national at the time of their death.3 If the decedent was a German national, German courts generally apply German succession law, irrespective of the decedent’s domicile.

If the decedent was not a German citizen, article 25(1) of the Introductory Act to the Civil Code (EGBGB) (old version) refers to the law of their home country, including the conflict-of-laws rules of that country. Probate matters are generally subject to state jurisdiction, and the US has neither federal succession laws nor ‘federal general common law’ rules.4 Accordingly, German courts apply, with regard to a US citizen’s estate, the law of the US state with the greatest nexus to matter.5 This is typically determined by the decedent’s last habitual abode in the US.6

If US state law refers back to German law, the German substantive provisions shall apply.7 Therefore, if a US citizen dies domiciled in Germany, their succession with respect to movable property is governed by German substantive law.

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