The law of succession regulates private law issues relating to the death of natural persons, primarily the transfer of the testators’ property to their heirs and entails the details of the succession. Succession systems can be based on the following principles:
- Based on the principle of lex rei sitae, the law of succession is determined by the law of the country where the estate is located. Thus, for those estates whose assets are in separate countries, the succession will be governed differently for the assets of the estates situated in the separate countries.
- Based on the principle of lex personae, the law of succession is determined by the personal law of the testator. Therefore, wherever the assets of the estate are located, the succession will be governed by the same law.
Initially, the law applicable to the succession of the objects of the estate was determined by the law of the country where the estate was located. Later, as industry and commerce developed, the succession of movable property became subject to the personal law of the testator.
This led to a further fragmentation of the estate and the division of the law of succession. Initially, Hungary followed the principle of the division of the estate, but later it switched to the principle of unity. The heirs in countries that may not follow the principle of unity may oppose the division of the estate by choosing another law to govern the questions of succession.
Where Hungary is concerned, detailed rules on succession with a foreign element are governed by Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession.
As a general rule, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his/her habitual residence at the time of death. Where, by way of exception, it is clear from all the circumstances of the case that, at the time of death, the testator was manifestly more closely connected with a State other than the State whose law would be applicable under the general rule, the law applicable to the succession shall be the law of that other State.
This may be avoided by the choice of the law applicable to the succession.
- The testator may choose as the law to govern their succession as a whole the law of the State whose nationality they possess at the time of making the choice or at the time of death.
- A testator possessing multiple nationalities may choose the law of any of the States whose nationality they possess at the time of making the choice or at the time of death.
- The choice shall be made expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition.
Some practical examples of the usefulness of choice of law for a person making a will abroad without choice of law but passing away in Hungary after relocating their habitual residence hereto with no close connection to other states:
- the validity of disqualification from inheritance in Hungarian succession law has an exhaustive list of legal grounds, i.e., other reasons do not result in valid disqualification. So, if these specific legal grounds prescribed by Hungarian law are not used, the disqualification will be null and void; or
- under Hungarian law, if the children (in special cases, other descendants), spouse and parents are not legal successors due to a will (excluding disqualification), they would still have a claim on legacy grounds for 1/3 of what they would inherit as legal successors. Thus, it is possible that the heirs named in the will may need to satisfy the legacy debts of the aforementioned persons, so they would get all that the testator intended.
To ensure that the choice of applicable law in a will is legally compliant and to ensure the validity of a will in general, especially if real estate assets are included as well, it is advisable to seek legal support.
