When someone dies owning property in more than one country, a fundamental question must be resolved before the estate can be administered: whose law governs?
The answer depends on the rules of private international law, commonly referred to as conflict of laws rules, and getting it wrong can have significant consequences, including an estate being distributed in a way the deceased never intended.
For Canadians with connections to European Union member states, this area of law has grown considerably more important since August 2015, when EU Regulation No. 650/2012 (the “Succession Regulation”, also known as Brussels IV) came into full force and materially altered the applicable framework.
The Canadian Conflict of Laws Framework
In Canadian common law provinces, conflict of laws rules draw a fundamental distinction between two categories of property. Immovable property, or real estate, is governed by the law of the jurisdiction in which it is situated (the lex situs). Movable property, including bank accounts, investments, and personal effects, is governed by the law of the jurisdiction in which the deceased was domiciled at the date of death.
Domicile is a legal concept that is frequently misunderstood. It is not equivalent to residence, nationality, or tax status. A person’s domicile is the jurisdiction they treat as their permanent home. Every individual is born with a domicile of origin, which persists until a domicile of choice is deliberately established elsewhere. Acquiring a domicile of choice requires both physical residence in the new jurisdiction and a genuine, settled intention to remain there permanently and indefinitely. As the Alberta Court of Queen’s Bench confirmed in Re Foote Estate, 2009 ABQB 654, the intention must be concrete rather than aspirational. In that case, despite the deceased having purchased a home in Victoria, British Columbia, and formed a general wish to relocate there, the court held that he died domiciled in Norfolk Island, Australia, because his plans lacked a specific timeline and the necessary groundwork for the move had not been laid. The case remains a leading Canadian authority on domicile and a clear illustration of how demanding the legal test can be in practice.
The EU Succession Regulation and the Nationality Election
The Succession Regulation, which applies to deaths occurring on or after August 17, 2015, replaced the former patchwork of national rules across participating EU member states with a single default connecting factor: the law of the jurisdiction in which the deceased was habitually resident at the time of death applies to the estate as a whole, subject to the Regulation’s exclusions, special asset-specific rules, and the practical limits that may arise in relation to third-country assets. Denmark and Ireland opted out of the Regulation entirely, and the United Kingdom’s withdrawal from the EU means it is treated as a third country for these purposes.
Of particular significance for Canadian estate planning is the election available under Article 22 of the Regulation. A person may designate, in their will, that the law of their nationality governs their entire estate in place of the default habitual residence rule. The elected nationality need not be that of an EU member state. A Canadian citizen habitually resident in Spain, for example, may elect Ontario law to govern their Spanish real estate. Prior to the Regulation, this was not possible, as the lex situs rule meant Spanish law applied automatically to Spanish land. Spanish succession law incorporates forced heirship provisions entitling children and spouses to fixed minimum shares of the estate, irrespective of the terms of the will. The Article 22 election provides a mechanism to displace those provisions where they would produce outcomes inconsistent with the testator’s intentions.
Renvoi and Its Practical Consequences
A further complexity arises where the habitual residence of the deceased is in a country that falls outside the Succession Regulation framework. Where the deceased’s habitual residence is in a third country, the Regulation directs EU member state courts to apply the private international law rules of that country rather than its domestic succession law directly. If those rules in turn refer the matter back to the law of an EU member state, the member state accepts that referral. This mechanism is known as renvoi.
The consequences can be significant. Consider a Canadian citizen habitually resident in the United Kingdom who holds real estate in France. The Regulation’s default rule points to English law as the law of habitual residence. However, because the UK is a third country, English private international law rules apply, and those rules direct that immovable property is governed by the lex situs. French law therefore governs the French real estate, and French forced heirship rules apply as a result. A valid Article 22 election can avoid this result: once a national law is designated in the will, the renvoi mechanism is generally excluded and the chosen law will govern the estate as a whole.
Key Considerations for Estate Planning
For Canadians with assets or connections in multiple jurisdictions, cross-border estate planning raises a number of practical considerations that warrant careful attention.
A will that does not address the multi-jurisdictional dimension of an estate may produce unintended outcomes regardless of how clearly the testator’s wishes are otherwise expressed. Any Article 22 election must be carefully and precisely drafted to be effective. The election is available only in respect of a nationality the testator actually holds, meaning that individuals with dual or multiple nationalities have greater flexibility in structuring their estates. Finally, domicile and habitual residence are distinct legal concepts that carry different consequences under Canadian and EU law respectively, and the two should not be conflated.
The interaction between Canadian conflict of laws principles, the Succession Regulation, and the domestic succession laws of individual EU member states can be complex. For individuals with cross-border estates, careful planning is essential. Contact a member of our Wills, Estates and Trusts team to discuss how your estate plan can be structured to reflect your intentions across jurisdictions.