International Succession Laws

By Law of 20th May 2016, N. 76, Parliament has created the notion of civil partnerships (“unione civile”), that is, when two persons of the same sex declare to an officer of the Population Register to be a couple and state where their common residence is and what rules shall apply to property matters. Children born to a civil partner through a surrogate mother may be registered as children of the civil partners in some jurisdictions and the latest Italian case law has allowed that such registration be effective in Italy as well. The law expressly provides that all references to “spouses” are taken to cover civil partnerships as well.

First, it is to be noted that Italian law (Decree 28/12/2013, No. 154) has now removed traditional distinctions with regard to the issue of a person: e.g. children born out of wedlock, adopted children, and lawful issue are now on the same footing. In order to ascertain whether the position of the legittimari was prejudiced by the deceased, the net value of the deceased’s estate must first be determined; next, all gifts made by the deceased are brought back into the estate for computation purposes (the value to be taken into account is basically their current value). The sum of the net value and the value of gifts forms the basis upon which the share reserved for each legittimario is calculated. All gifts made by the deceased are brought back into the estate, even those made before the birth of the legittimario in question or before his relationship with the deceased had arisen. For instance, the share of the wife of a subsequent marriage is to be computed with reference also to gifts made by the deceased to his first wife and to the children of his first marriage (Supreme Court, 7th March 2016, No. 4445). There are different rules relating to legal succession and testamentary succession (Civil Code, arts 553–564). The principle common to both is that any disposition made by the deceased to the detriment of the legittimari is liable to be set aside at the instance of a legittimario who has received less than his/her share (his/her heirs may also sue in his/her stead, after his/her death). In the case of legal succession a legittimario will attack gifts made by the deceased; in the case of testamentary succession he/she may attack testamentary dispositions as well. Where the deceased made several gifts during his/her lifetime, they must be attacked in reverse order, that is taking the latest into account first and then proceeding backwards in time until the reserved share of the plaintiff is restored. In order to succeed, the plaintiff must first account for anything received from the deceased both during his/her life as a gift and under his/her will and then show that he/she is still short of the share to which he/she is entitled. Should the donee of an immovable asset, sued by a legittimario in order to set aside the gift made by the deceased to him/her, have sold the subject-matter of the gift, the purchaser can be sued as well and be ordered to return the asset or its current if the donee cannot make good the damage suffered by the legittimario. A practical consequence of the rules on the protection of legittimari is that any asset, especially immovables, received by someone by way of gift cannot be sold easily and is never accepted by banks as collateral for a loan unless 20 years have elapsed from the date of the gift (Civil Code, art 563.1). Special rules apply in respect of foreign residents (see I6.20 below).

No agreement concerning a succession is ever valid if entered into before the death of the person in question, except for the family agreements recently introduced in to our system (see I6.12 below). The breadth of the rule (Civil Code, art 458) is such that it encompasses not only testamentary contracts, but also the sale or other disposition of the rights that an individual might or will have over the succession of someone who is alive. Waiver of rights over such a succession is also invalid. Also an agreement under which one heir agrees to indemnify his co-heir who has received less than his share is void if entered into before the death of their parent (Supreme Court, 27th November 2015, No. 24291). The clause of a company’s by-laws under which the surviving partners are entitled to purchase the share of a deceased partner at a given price is not against the law. Two people cannot make a joint will (Civil Code, art 589). An agreement not to revoke a will is void (Civil Code, art 669). A testamentary disposition in favour of someone upon the condition that the latter will draw up a will in favour of the testator is void (Civil Code, art 635).

Law of 14 February 2006, No. 55 has introduced seven new articles in the Civil Code (Civil Code, art 768-bis—768-octies) that regulate the family agreement (Patto di famiglia). The family agreement is a contract by which an entrepreneur transfers his/her business (or his/her shareholding in a company) or part of it to one or more of his/her descendants (Civil Code, art 768 bis). The aim of the family agreement is to allow an entrepreneur to secure and perpetuate a business before his/her death, thus avoiding controversies between the heirs after his/her death. The family agreement is an exception to the general rule (Civil Code, art 458) that prohibits testamentary agreements (see I6.11 above). Family agreements must be executed between the entrepreneur and all the legittimari (Civil Code, art 768-quarter). As a matter of law, family agreements cannot prejudice the reserved shares to which the legittimari are entitled (see I6.9 above). As a consequence, the heir or heirs who receive the business or the shareholding under a family agreement must pay to the other legittimari a sum equal to the reserved share the latter are entitled to. The entrepreneur can satisfy the rights of the legittimari who do not receive the business by assigning to them other assets (real property, movables) that will be imputed to their reserved share. The family agreement must be executed by public deed (atto pubblico) in the presence of a notary.

Where there is no will, or where a will contains only bequests to legatees (that is, without the appointment of an heir) or does not deal with the whole estate of the deceased, the heirs are determined by law in the following order: spouse, issue, ascendants, siblings, other relatives until the sixth degree, the state (Civil Code, arts 565–586). The rules concerning the shares to which each is entitled are similar to those already listed above in the context of reserved portions (see I6.9 above). There is, however, an obvious difference: the rules on the reserved portions never exhaust the assets of the deceased and leave a share for the deceased to dispose of as he/she wishes; those on legal succession necessarily concern the whole estate. By way of example:

If a marriage was declared to be a nullity (for instance, because one of the spouses was of unsound mind or under age or within the prohibited degrees) the deceased’s spouse, if he or she was acting in good faith at the time of the marriage, enjoys the same rights as a validly married spouse of the deceased unless the latter was married with someone else at the time of death.

There are six types of will.

A will may be revoked either by making a new will or by declaring to a notary before witnesses that the will is revoked or, in the case of a holographic will, by tearing it up or erasing the relevant parts. A will is revoked by law if the deceased at the time of making his/her will had no issue or believed that he/she had no issue, but issue thereafter came either into existence or to light—unless the testator provided for these circumstances in his/her will (Civil Code, art 687).

The testator may provide for the devolution of his/her assets by means of separate wills; a new will does not revoke previous wills unless it relates to the same subject-matter.

Whoever has a holographic will in his/her possession must bring it to a notary upon learning of the death of the testator. The notary makes the will public by incorporating it in a formal document, copies of which must be released to any interested party. A copy is sent to the local court. The notary proceeds likewise when a will has been deposited with himself/herself, but, in the case of a notarial will, only after he/she has given notice to the heirs and legatees that he/she is able to locate easily. Italian law does not embody any procedure similar to probate.

The general rules as to inability to be an heir or a legatee apply (see I6.2 above). Additionally, a person who drafted or witnessed a will cannot benefit from it.

The general rule is that the national law of the deceased governs his/her succession. There are no specific rules relating to immovable assets in Italy: the law governing the succession generally governs their devolution by succession. Italian rules relating to reserved shares are, therefore, not applicable. Italian citizens who reside (that is, permanently live) abroad may elect to have their succession governed by the law of the state where they reside. Italian rules on reserved shares do not apply to the legittimari residing abroad at the time of the death of the testator. As a consequence, an Italian citizen who has taken his/her family to reside abroad can freely dispose of his/her assets either by gift or by will. The choice of the law of the state of residence becomes ineffective if the testator no longer resides there at the time of death.

When several heirs are appointed to the estate or to a share of it, and one of them cannot receive by will (see I6.2 above) or does not accept the estate (see I6.3 above), his/her portion accrues to the others unless the will provides otherwise or the rules on representation apply (see I6.5 above).

An heir or a legatee cannot be sued by someone seeking a judicial declaration that he/she is a fiduciary for a third person unless the plaintiff alleges that the secret beneficiary is one who cannot receive by will from the testator. It is submitted that this rule does not mean that legal structures similar to secret and half-secret trusts are invalid or illegal; in any event, the law states that the heir or legatee cannot recover what he/she has handed over to a secret beneficiary (Civil Code, art 627).

Italian law recognizes certain testamentary dispositions that are similar to testamentary discretionary trusts or to charitable trusts. As to the first instance, the testator may require the heir (or a legatee) to deliver a part of the estate or even the whole estate to persons chosen by the heir or legatee either within a list of persons or entities set out in the will or among those belonging to families or classes of persons identified by the testator (Civil Code, art 631). As to the second instance, the testator may charge the heir with the obligation, lasting for a certain period of time or even for ever, to devolve certain amounts to help newlywed couples or families with newly born babies, to sustain those commencing a new professional activity or those in need, or otherwise to achieve a purpose relating to public welfare as long as the beneficiaries belong to a specific class or to specified families (Civil Code, art 699).

Only one instance of the old fideicommissum remains: when there is a person of unsound mind or seriously handicapped for whom a guardian is appointed by the court and one or more persons or entities take care of his/her personal needs. An ascendant, one or both of his/her parents, or his/her spouse may execute a will in his/her favour and whatever is inherited by him/her will then pass upon his/her death to those who took care of his/her personal needs (Civil Code, arts 692–696). During his/her life the heir (or, rather, his/her guardian) will ordinarily be entitled to receive only the income of the inheritance; however, the court may authorize the guardian to sell one or more assets should this be necessary.

One or more executors may be appointed by will (Civil Code, arts 700–712). Their duty is to see that the will is implemented. In order to do so, the executors take possession of the estate (for no more than one year; the court may extend this period by one additional year) and manage it. They cannot sell any asset of the deceased’s estate without court approval, unless there are dispositions in the will that empower them to sell. If the testator has so provided, the executors apportion the estate among the heirs. The executors must deliver assets of the estate to the heirs, if so requested by them, as soon as their possession is no longer necessary for the performance of the executors’ duties (and in any event when the period of possession—see above—runs out). If the executors remain in office for more than one year they must account to the heirs annually.

A legatee does not have to accept the bequest made to him/her—he can refuse it, if he/she wishes. A legatee receives directly from the testator and must claim his/her bequest from the heirs or from the specific heir charged by the testator. The testator may bequeath something that is not part of his/her estate but belongs to a third party; the heir must then purchase it and deliver it to the legatee or else pay its current value to him/her. Among the many rules on legatees, it is worth mentioning that if the subject-matter of the bequest was sold or otherwise disposed of by the testator, the bequest has no effect.

Conditions which cannot be performed or which are against public policy or cogent rules of law are ignored. They do not affect the validity of the will unless it appears that they were the driving reason of the testator (Civil Code, arts 634 and 626). Any condition that would prejudice an heir or legatee upon his/her marriage is void unless it concerns a periodic payment or the right to live in a specified property until marriage (Civil Code, art 636).

A term of the will under which someone becomes an heir from or until a certain time has no effect and the heir is appointed absolutely. A condition subsequent, upon the occurrence of which an heir loses his/her inheritance, thereby ceasing to be an heir, is, however, valid. The will may specify who shall take the place of the heir upon the occurrence of the condition, otherwise the rules on representation apply (see I6.5 above).

Further to the ratification of the Hague Convention on the Law Applicable to Trusts and their Recognition (Law of 16 October 1989, No. 364), it is generally accepted that trusts may be created in Italy by Italian citizens provided that a foreign law is chosen to govern them (see M Lupoi, Trusts, Cambridge University Press, 2001, Chapter VI). Case law recognizes this position as correct. Nobody doubts that trusts made by foreigners in respect of Italian assets are valid and that the provisions of the foreign law governing the trust will be applied by Italian courts.

A testamentary trust made in Kentucky by an Italian citizen (who also enjoyed American nationality) in favour of Italian beneficiaries and in respect of Italian assets was upheld by the Tribunal of Lucca (23 September 1997, in Foro it., I, 2007 and 3391 and in Giur. it. 1999, 68). There is a considerable body of literature on testamentary trusts in Italy. Given the rules applicable to testamentary executors, who in fact are very close to trustees (see I6.25 above), no obstacles in principle are put forward.

Law of 23 February 2006, No. 51 has introduced art 2645-ter in the Civil Code. According to this new provision, an individual (’settlor’) can now set aside real property (or movables registered in public registries) for the benefit of disabled persons, public authorities or any persons to achieve a praiseworthy interest. As a consequence, such assets will constitute a separate fund and will not be part of the settlor’s own estate. Such destination will be recorded in the Public Register where the asset is registered. The duration of such destination cannot exceed 90 years. The deed of destination must be executed by public deed (atto pubblico) in the presence of a notary.

re-introduced the inheritance and gift tax into our system. Specifically, Law No. 286 re-introduces, with some amendments, the provisions contained in the Legislative Decree of 31 October 1990, No. 346 (Consolidated Inheritance and Gift Tax Act) which had been abolished on 24 October 2001. The same tax applies to successions and lifetime gifts. The notion of gift covers direct and indirect gifts. Direct gifts are termed ‘donations’ by the Civil Code and require a notarial deed unless their value is small. Indirect gifts are all other contracts, agreements, deliveries of movable goods, waiver of rights, and so forth as a consequence of which someone deliberately enriches someone else for the purpose of benefiting him/her. Apart from lifetime gifts, the tax is levied upon the succession of Italian residents, even if the succession concerns assets located abroad. If the deceased was not (or the donor is not) an Italian resident, the tax is levied only on assets located in Italy. Shares of Italian companies are deemed to be in Italy even if they are physically held abroad.

Transfers of assets by death or donation are taxed as follows: