In the previous we looked at some general concepts associated with inheritance and wills in Italy and the Italian system of “forced heirs” or “legittima”. In this article, the last part of our look at probate issues associated with Italy we will be looking in a bit more detail into the actual process of dealing an acceptance of inheritance in Italy.
Obviously the first thing to do on a probate in Italy is to identify what assets the deceased left in Italy. This is not always as easy as it sounds. Sometimes names are spelt incorrectly and therefore a search at the appropriate land registry may not show that the deceased owned something when they really do. Sometimes property is put into the name of a different entity (a limited company, the children or even the mistress) for tax or other reasons. This is all assuming, of course, that the purchaser decided to register the property in his name in the first place! Why wouldn’t they you may be thinking – well, sometimes people decide not to register the property in their names because it saves on legal fees and taxes. This is obviously a very risky strategy and one which most people would not even dream about doing in their home country, but does sometimes happen abroad.
Next we would need to identify which law applies. We looked at this in a bit of detail in the previous article so I won’t repeat it here.
So far so good. The next bit is where it starts to get a bit more complicated and will depend on whether the deceased listened to our advice as to whether they should make a separate Italian will or not.
The first thing to do is to carry out a search for the latest Italian will. This is done at the “Archivo Notarile” which is only accessible to lawyers and notaries.
If there is a valid Italian will which has not been revoked then the contents of that will will determine what is to happen to any assets in Italy. If there is no valid Italian will then we would need to identify whether there are any other valid wills which cover the assets in Italy. Of course a UK will will be valid in Italy if there is no Italian will.
If the acceptance of inheritance is being done in accordance with a non-Italian will then there are various stages to the inheritance. Those of you who have been following this series of articles will note that the process is actually very similar to the process in Spain – unsurprisingly as the two legal systems are actually very similar in many ways.
Copy of the will and of the Grant of Probate that have been legalised at the Foreign & Commonwealth Office will have to be officially translated into Italian (after all, it is unlikely that a non-Italian will is drafted in Italian). This can cost more than the cost of making an Italian will in the first place and yet again emphasises the importance of drafting up a separate Italian will in the first place.
Birth and marriage certificates may also be needed for identification purposes (the way that women change their surnames in the UK when they get married tends to confuse many foreign officials and this is the best way of explaining our rituals). Again these will have to be legalised and translated.
It may also be necessary to prepare an affidavit or certificate of law to explain to the authorities in Italy that what the will says is actually legal in that country. After all – if the will doesn’t follow the “legittima” that we talked about in the previous article then the authorities get a bit nervous and need to be “educated” in the ways of the inheritance rules of the other country.
Then a Declaration of Succession (““Dichiarazione di Successione”) is drafted in order to pay the relevant inheritance taxes (after all, now that Inheritance Taxes have been re-introduced into the tax system they should be paid!).
The important point to make here is that this whole process can take some time – particularly as much of it can’t be started until the probate in the UK is obtained. This has an impact on taxes because if the taxes are not paid within 12 months of the date of death then surcharges and interest are due.
If the deceased died intestate then the process is simpler but more complicated at the same time. There are less steps to be taken, but the situation can be more complicated.
First of all we would need to explain to the Italian authorities who is — under the combined rules of Italian & English law — entitled to the inheritance. This will need to be supported by the appropriate documentation, duly and officially translated into Italian & authenticated. We may also need to produce a certificate of law for presentation in Italy. This is not always simple. Imagine the case where somebody was born in one country (say Germany), got married in another (say Sweden) but has lived in the UK for most of their life and has bought a property in Italy. Trying to unravel all of this can be difficult.
Then once this has all be sorted out the inheritance documentation needs to be signed before a Notary Public in Italy, the taxes need paying and the property registered in the name of the beneficiaries.
In each of the above cases inheritance tax is likely to have to be paid. As we touched on in the earlier article Inheritance Tax had been abolished for a while in Italy, but with a change of government came the re-introduction of Inheritance Tax (as we suspected would happen). Taxes due on an estate are calculated very differently in Italy from the way they are calculated in England. The amount to be paid is calculated by reference to each beneficiary rather than on the basis of the estate as a whole. Each may have his or her own tax free allowance and will pay tax at a rate which will vary according to their relationship to the deceased. A return has to be made to the Italian tax office and the necessary taxes paid. This should be done within twelve months of the date of the death as otherwise a surcharge and interest may become payable.
This is all assuming that any will is not contested by anybody. If this happens then you are into a whole new ball game with the matter likely ending up in court to decide who should inherit. We all know how slow courts in the UK can be - now imagine how slow they can be in a country with such a relaxed attitude as Italy and where you have several jurisdictions and maybe even a Judge who has never dealt with International matters before!
Other potential problems that may present themselves when dealing with an inheritance could be that the property was not properly registered in the name of the deceased in the first place. Perhaps they inherited the property but never registered it in their name. In that case the title deeds will need to be rectified before the inheritance can take place. Perhaps the deceased has not paid all the taxes that they should have during their life time and the tax authorities want to claim this back.
Just like in any other “foreign” jurisdiction important consideration needs to be given to what is going to happen to the property after the inheritance is accepted. In many other countries we tend to find the beneficiaries are likely to want to well the property just after or at the same time as accepting the inheritance. Certainly if a buyer can be found so that the “inheritance” can be done immediately before the “sale” then this can keep costs down – although sometimes Notaries will not allow this. Having said that, the sort of people who buy in Italy as quite different from the ones who buy in many other countries and we tend to find a greater percentage of beneficiaries who want to actually keep the property after they have inherited it.
Next time we will be continuing our journey around the world looking at different inheritance and probate systems in different countries.
Peter Esders is a Partner and Laura Protti is Head of the Italian Department in The International Law Partnership
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