In this, the latest in a series of articles about probate in “foreign” countries we will be looking at Italy.
Italy has long been a favourite haunt of the Brits. How many people love the idea of that property in Tuscany or even in one of the increasing number of areas which are described as the “New Tuscany”? As a consequence many people have bought in Italy over the year and this has increased dramatically over the past few years.
As a consequence, the inheritance and probate issues relating to these properties are becoming increasingly relevant for the professionals who are often involved in cases were the succession of these assets has not been properly planned.
In this article we will be looking at some of the general issues associated with inheritances and wills in Italy.
The first thing to identify when somebody dies is under which law the inheritance should be regulated. This is a huge subject and you could write books just on this subject alone. However I will try and keep the situation in relation to the UK and Italy as quick as possible.
I don’t want to teach any of the readers to suck eggs, but I think it is important to start with the basics. The English rules relating to succession may vary according to whether the estate consists of movables or immovables and whether the deceased has left a will or died intestate.
Contrary to the Italian legal system, the English law has adopted the so called principle of “scission” with the result that the succession of movables is governed by the law of the deceased’s domicile, while the succession of immovables is governed by the law of the situs.
For example, if you bought a property in Italy in your name and you still own it at the time of your death, under the English rules its succession should be regulated by the Italian law of succession. The Italian legal system accepts this “referral” by the English law and therefore the succession of this asset will be regulated by the Italian law of succession.
Under Italian succession law certain members of the family (“forced heirs”) are entitled to a share of the deceased’s assets at the time of death. This share is called “legittima”. For example, if you are married with three children, on your death your children will be entitled to one half of your estate and your spouse to a one-quarter share of your estate. The remaining one-quarter share (“disposable portion”) can be left by will as you wish. If you have willed property whose value exceeds the value of the disposable portion, the rights of the forced heirs are regarded as violated. Italian law therefore allows the forced heirs to reduce the dispositions (and life donations) made in favour of third parties in a sufficient amount to guarantee the value of the so called “forced heirshp”.
The following are entitled to this statutory fixed share of the deceased’s estate:
- The spouse (husband or wife). The separated partner has the same right to the share of “legittima” of the non –separated partner, provided that the judge has not declared him/her responsible for the separation. A divorced partner does not have any right to the “legittima”;
- The children (legitimate, legitimated, illegitimate, or adopted);
- The ascendants: when no children (or their ascendants) are alive at the time of the deceased’s death.
These particular rules on “forced heirship” normally only apply when the deceased is an Italian national. Therefore if you are not an Italian national they do not apply and you can leave your assets in accordance with your own National Law, which I the case of a UK national basically means that you can leave your property to whoever you wish. Having said if somebody who is not Italian owns property in Italy it probably makes sense to follow the same rules as an Italian national would have to (assuming that their own National Law allows them to). There are many reasons for this – first of all it minimises the risk of any confusion and/or conflicts among your heirs on your death. We often find that if the legittima has not been followed then there is often a challenge to the inheritance by somebody who thinks that they are entitled to part or all of the estate because of the legittima and has heard that they exist.
Secondly there may be less tax to pay if the assets are left in accordance with the legittima. Lastly following the legittima will help the Italian authorities to understand what is going on and is likely to keep the costs of the inheritance down. Having said that, there can be very good reasons why somebody may not wish to leave their assets in accordance with the legittima and I personally feel that their wishes should take precedence over any practical issues.
The reasons for making an Italian Will
If valid, English wills are normally recognised in Italy but we always advise our clients to make an Italian will to cover specifically the succession of their Italian immovable assets.
The main reason to make an Italian will is to simplify matters on your death. First of all, if your heirs are left with an English will only, they may have substantial difficulty in dealing with the transfer of any Italian assets. This is because the will must be authenticated before an Italian Notary Public who in turn may experience substantial difficulties in examining your English will with regard to the Italian assets, in solving the conflicts between the English and Italian law, as well as advising your heirs and/or preparing suitable documentation to transfer the assets. This is also probably going to be the first English will that they have come across, which will probably mean that they will require a declaration or certificate of law explaining how English law works – which in turn increases the costs to the Estate. On the contrary, if your heirs are left with an Italian will, this will already be deposited with an Italian Notary who will be familiar with the document and will be able to deal with all the relating formalities. Secondly, the cost of having an English will recognised in Italy is normally much greater than the cost of making an Italian will.
On a very basic level the cost of translating an English will into Italian is probably going to be greater than the cost of making an Italian will in the first place – and this is assuming that the authorities in Italy do not insist on some sort of certified translation.
The process of making an Italian will is extremely formal and is done in a very different way to the way that it works in the UK. For a start the will needs to be signed before a Notary Public.. The wishes of the testator are verbally declared to the Notary Public who records the will in an official document that is translated into English and signed by the testator before the Notary at the presence of an interpreter and two witnesses. The will is subsequently deposited with the Notary.
Should you decide to make an Italian will, it is also advisable to make sure that there is no conflict between the Italian will and the English will – after all the last thing that you want is for a client to have gone through the bother of making an Italian will only for the UK will to be drafted with a “catch all” revocation clause which may revoke the Italian will.
Under the provisions of Italian law, a declaration of succession must be presented to the tax offices (Ufficio dell’Agenzia delle Entrate) of the Town Hall (Comune) when the deceased was last resident within 12 months of the date of death. If the deceased was not resident in Italy, the declaration of succession must be presented to the relevant Tax Offices of Rome. The heirs will be requested to pay the Inheritance Italian Tax when they present the above mentioned declaration to the competent office.
The Italian inheritance tax was abolished in 2001 but it has been recently re-introduced by the government. Those who are cynical may wish to look at who was in power at the time when it was abolished and who was in power when it was re-introduced. The Inheritance tax is currently between 4% and 8% of the value of the assets depending on a number of different factors. The spouse, the ascendants, and the descendants of the deceased (up to the 4th degree) pay the inheritance tax only on the excess of one million Euros.
In case the will does not exist or is declared invalid, the general rules on Intestate succession will apply with the result that the closest relatives of the deceased will be entitled to a share of your assets in accordance with the provision of Italian law.
Next time we will be looking in a bit more detail into the process of accepting an inheritance in Italy and the procedure that is necessary for that.
Laura Protti is Head of the Italian Department in The International Law Partnership
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