The law in Ireland states that in order to ascertain how an asset is held abroad one looks at the domicile of the owner. Domicile is affected by the deceased’s birth and by movement since their birth looking from the Domicile of origin to the place to which the deceased intended to die.
Ireland is a schismatic country which means that moveable property passes in accordance with the domicile of the deceased. However, immovable property passes in accordance with the law of the country in which it is situated.
On the other hand, property held in Spain is determined by “Nationality”. Spain is a unity country which treats immovable and moveable assets in the same way.
If a property is held in France the connecting factor here is not Domicile and Nationality but Habitual Residence and is a schismatic country which means that any immovable property passes in accordance with French law. Habitual Residence can be defined as the centre of living or the place most associated with his/her pattern of life.
In Ireland, children’s rights are protected by way of application to the court under Section 117 of the Succession Act. In civil law countries such as France they give enforceable fixed shares. Forced heirship provisions usually give initial consideration to dependents or, if none, to ascendants and often reflect the position on intestacy. In France the spouse has no forced heirship rights against children or parents. If there is one child then that child is entitled to one-half of the estate and the remainder of the estate can be disposed of by Will, but if there are three or more children then they are entitled to three-quarters of the estate equally among them. Therefore, even if the Will gives the entire estate to the spouse, he or she may only receive as little as one-quarter of the estate in France. One way to minimise this effect is to hold the property en tontine which is similar to the English concept of joint tenants but not exactly the same. What this, in effect, means is that the property is treated on the death of one of the parties to a marriage as always belonging to the survivor and therefore any debt on the property will not be deductible for Inheritance Tax purposes on the first death. Additionally, any schemes which are seen to disinherit entrenched heirs may be set aside under the doctrine of fraud (fraud la loi).
In Ireland, a Will can state that it disposes of all the assets worldwide but this is subject to automatic Succession Act rights and it is important that a person obtains advice in the relevant country and considers having a Will drawn up in that country. For a Will to be valid in Ireland it must be signed in the presence of two witnesses who sign in the presence of each other. However, civil law jurisdictions recognise three separate forms of Will:-
1. Holographic Will
This is made by a testator in his own handwriting and signed by him.
This is made in the language of the jurisdiction and signed in the presence of two witnesses and a notary. In many jurisidictions such Wills have to be registered.
3. Mystic Will
A form of secret Will where it is deposited with a notary but the notary is unaware of its contents.
Tax on Death
For Irish Inheritance Tax see the article entitled “Capital Acquisitions Tax” on this website.
The country in which the property is situated may also look to tax a property on death. For civil law jurisdictions it is common for the tax to be assessed according to the person to whom the property is passing. In France, for example, there is no automatic exemption for transfers between spouses—rather each beneficiary is separately taxed with his own tax free allowance and tax rate according to his relationship to the deceased.