Choice of Law of Settlors in Italian-American Cross-Border Succession

In the area of estate planning, common law jurisdictions typically afford much more discretion to the individual to design a scheme of distribution. Conversely, civil law systems (such as Italy’s) have statutes that tend to be long, detailed, and allow for less discretion on the part of the settlor and the court.

In Italy, statutes impose forced heirship rules, calculation of lifetime gifts made by the settlor, nullity of any agreement about future inheritance (different from a disposition by will), and very little room for the validity of a trust. These forced heirship rules exist to protect the immediate family (as spouses and children are guaranteed minimum amounts), but they can be viewed as constrictive by those not used to the Italian legal system.

Americans with ties to Italy and Italians with ties to the United States both usually prefer more discretion in designing the distribution scheme. This desire naturally leads to questions about when and under what circumstances the settlor is free to bequeath the estate as they choose in an Italian-American succession.

As a previous post explained ⁽¹⁾, in cross-border successions there are two main questions: who is the competent judge and which law is applicable? The answers are provided by choice-of-law rules (or conflict of laws or private international law-PIL) and while the US has unwritten rules, in Italy there are precise, written rules for identification of a competent judge and applicable law.

In addition to general US choice-of-law (unwritten) principles and Italy’s statutory choice-of-law rules on succession matters, the European Union choice-of-law clause on succession (EU Regulation no. 650 of 2012: hereinafter EUSR) shall be considered, and will ultimately prevail over those in Italy. 

However, it should be kept in mind that EUSR does not cover numerous aspects implied by succession, like family relationship, legal capacity of a person, marital property regime, gifts, trusts, inheritance taxes, movable and immovable property registries, and several others, hereinafter referred to as Excluded Aspects ⁽²⁾.

Therefore, it is possible that in a succession judgment, the judge, in order to determine jurisdiction, will analyze US choice of law (unwritten principles) and European PIL law (and perhaps the Italian PIL law too if there is any issue with the Excluded Aspects of the inheritance).

Though it may be relatively simple to determine the jurisdiction of a cross-border succession, it is much more complicated to determine retrospectively what applicable law the judge shall apply.

As a matter of fact, if the case is under the jurisdiction of a US judge, they will either apply the (unwritten) principle which was created to resolve interstate jurisdiction cases or those specific to transnational conflict of laws (scope, priority, etc.), which occasionally affirm the jurisdiction of a foreign country ⁽³⁾.

Italian judges, instead, shall determine their choice of jurisdiction in private international law by considering Articles 4 to 19 of EUSR primarily, which lead to the jurisdiction of the “habitual residence” at the time of death of the individual. In other words, wherever the deceased was living (if they were living there legally) when they died becomes the default succession law for their estate. This action is meant to give clarity to the situation. However, if the deceased’s will indicates a preference for their national succession law to apply, the provision can be overridden⁽⁴⁾.

Last but not least, if a case of choice of law brought before the Italian judge also involves one of the Excluded Aspects of EUSR (for example, the marital-property regime), they shall also take into account the Italian jurisdiction from this point of view. In this case, four alternative criteria support their jurisdiction ⁽⁵⁾.

Much more complicated is establishing which law is applicable in an intestate cross-border succession. However, the burden of identifying the choice of applicable law (the specific electio legis) is avoidable if the choice of law is made directly by the testator, though Italian and European laws do not completely allow for freedom of choice here, as there are limitations contingent upon the case. In fact, only two options exist:

• EUSR provides that settlors may choose the law of their nationality (as the only alternative to the standard application of the law of “habitual residence”) ⁽⁶⁾.
• Italian PIL (for Excluded Aspects) provides that they may choose the law of last residence (6) (as the only alternative to the applicable national law).

Citizenship	Last Residence (6)
ITA	ITA	Standard rule and choice-of-law would lead to the same applicable law (Italian)
ITA	USA	Can choose both applicable laws, Italian or US (7)
ITA-USA USA-ITA	ITA
ITA-USA USA-ITA	USA
USA	ITA
USA	USA	Standard rule and choice-of-law would lead to the same applicable law (US)