A family whose members and assets are spread across several countries faces, at the worst possible moment, one of the most tangled problems in private law: whose rules govern who inherits what, and which countries tax it. Succession is hard enough within one legal system. Across several, with real estate in one country, a family in another and a business in a third, it becomes a problem that is far cheaper to plan than to resolve, and one that is almost always left unplanned until it is too late.
Two separate questions
Cross-border succession splits into two questions that are frequently confused. The first is civil: which country’s law decides who is entitled to inherit, in what shares, and whether the deceased could freely dispose of their estate. The second is fiscal: which countries tax the inheritance, and at what rates. These are governed by different rules, can point to different countries, and have to be planned together, because a plan that optimises one while ignoring the other solves half the problem and worsens the other half.
The EU succession framework and choice of law
Within most of the European Union, a single framework determines which country’s law governs a cross-border succession, with the default being the law of the country where the deceased was habitually resident at death. Crucially, it allows a person to choose, in their will, the law of their nationality to govern their whole succession instead. That choice is one of the most powerful and underused planning tools available, because it lets someone with a connection to a jurisdiction of free testamentary disposition escape the forced heirship of another.
The single most valuable sentence in many cross-border wills is the one that chooses which country’s law will govern. Most wills never contain it.
Forced heirship, and how it surprises people
Many continental European systems impose forced heirship: a portion of the estate must pass to certain heirs, typically children, regardless of the deceased’s wishes. Someone from a system of free disposition, who assumes they can leave their estate as they choose, can find that the law of their country of residence overrides their intentions entirely. The choice-of-law option is precisely what allows this to be managed, but only if it is exercised in a valid will before death, not discovered by the heirs afterwards.
Inheritance tax follows different lines
The tax question does not track the civil one. A country may tax an inheritance because the deceased was resident there, because an heir is resident there, or because an asset is located there, and more than one country can tax the same estate, with relief for double taxation being patchy and treaty coverage for inheritance tax far thinner than for income tax. Real estate is almost always taxed where it sits. A family with assets and members in several countries can face inheritance tax in several at once, and the interaction has to be modelled rather than assumed.
Structures that bring order
This is where a holding structure earns its place in a family’s affairs. Consolidating assets under a holding, with governance and succession rules written in advance, can convert an unpredictable multi-country succession into a planned transfer of shares governed by a coherent framework, as we describe in our notes on how family offices use Dutch BVs and stichtingen and on Latin American family wealth and succession. The structure does not remove the underlying rules, but it organises the estate so that they apply to something coherent rather than to a scattered collection of assets in different systems.
Plan it while it is abstract
The defining feature of succession planning is that it must be done while the subject is alive and the question feels remote, because everything useful, the choice of law, the will, the structure, the lifetime steps, requires the person to act. A family that treats succession as something to deal with later deals with it under the worst conditions: grief, deadlines, and rules discovered rather than chosen. The families who come through a cross-border succession well are the ones who treated it as a design problem years before it became an event.
Montclare builds and operates European structures with the substance and documentation that these rules require. Our services are set out on our services page.
This article is informational and does not constitute tax or legal advice. Rules of this kind evolve and their application depends on the facts of each structure. Each engagement is subject to scope and applicable regulation.