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October, 11 2019
October, 4 2019
WILLS AND SUCCESSION LAW IN CYPRUS By: Danos & Associates
Which statutes regulate Wills and Succession in Cyprus?
Three different statutes govern the law in regards to Wills and Succession in Cyprus.
a) The Wills and Succession Law (Cap 195) which governs the law in relation to wills and succession in Cyprus.
b) The Administration of Estates Law (Cap 189) which governs the procedure which is to be followed in executing a will and the administration of the estate of deceased persons.
c) The Probates (Re-sealing law) Law (Cap 192) which applies to individuals who have passed away in the United Kingdom or in another Commonwealth country and who had property in Cyprus at the time of their death. In particular, this statute provides the procedure that must be followed in order to re-seal in the Cyprus Courts the Grant of Probate or Letters of Administration from another Commonwealth country.
What is a will?
A will is a formal written legal statement setting out the way in which a person’s property is to be distributed following his/her death. The testator must be of sound mind and be over 18 years old in order to have the legal capacity to make a will. The testator’s mental health should not be affected by advanced age or other reaons. Moreover, it is important for the testator to understand the full meaning of the legal document he/she signs and its effects, that is to understand the rights derived from the document. Moreover, an individual who wishes to draw up a will must be aware of the fact that there are certain formalities which must be complied with regard to witnesses, signatures etc. in order for the will to be valid.
How is a will revoked?
There are several ways to revoke a will:
(a) By drafting a subsequent will in which there is a statement that the new will revokes the previous will.
(b) By drafting a subsequent will which revokes only part of the previous will that is not agreeable (compatible) with the previous will.
(c) The testator willingly tears, burns or destroys the will or the will is destroyed by another individual who follows instructions of the testator.
(d) In case the testator gets married or he/she has children after the execution of the will, the aforementioned is considered to be revoked, unless there is a provision in the content of the will in which it could be implied that the testator drew up his/her will considering the possibility of a marriage or a child.
(e) In case the testator had started procedures of getting a divorce, the will is considered to be revoked unless he/she re-executed or reviewed the will.
Will limitations – Disposable and statutory portion
There are restrictions on the testator in sharing his/her estate. According to Cyprus law, the testator cannot distribute the whole estate entirely in accordance with his/her wish as a certain portion of the deceased’s property must be reserved for close relatives who are alive at the time of the testator’s death and that portion cannot be disposed of by the testator’s will. This portion which Section 41 of the Wills and Succession Law, Cap 195 sets aside is called the “statutory portion” and it seems that it is provided by the Cyprus law for the protection of the family.
Inversely, the remaining amount after the subtraction of the statutory portion is called the “disposal portion” and can be disposed of as the testator wishes. Thus, the disposable portion can be determined according to the surviving relatives at the time of his/her death.
It is worth mentioning that prior to July 2015 there was an exemption for British citizens or citizens of most of the Commonwealth countries with regard to the compulsory portion as they were entitled to distribute all their estate by will. However, the forced statutory portion now applies to any individual who dies domiciled in Cyprus or he/she had immovable property in Cyprus.
It could be said that the law protects the close relatives; nevertheless it could be argued that it may lead to undesirable outcomes in cases where the deceased did not have good relationships with the surviving relatives. However, there are other ways that an individual can distribute his property according to his/her wishes, for instance through trusts or gifts during his/her lifetime.
Calculation of the disposable portion
The exact portion between the statutory and the disposable portion varies depending on the surviving relatives at the time of the testator’s death and the degree of kinship with the deceased. In case of leaving a surviving spouse and children or any descendant of any children (grandchildren) who died while the testator was alive, the compulsory portion is three quarters of the net value of the estate. This means that the disposable portion, namely the portion that can be distributed according to the testator’s wishes must not exceed the one-fourth of the net value. However, if the deceased had no surviving children or any descendant of a child, but a spouse or parent, the statutory portion is half of the net estate, thus the disposable portion is one-half of the net value. The only way for the testator to dispose of his/her assets freely is if he/she dies without having a spouse, children or descendants of children or parents.
However, it must be noted that in case where the testator distributes more than the disposable portion of his/her estate, the will is not considered as invalid, but the distribution will be decreased proportionately to the portions that the deceased was allowed to dispose of.
The rights of the surviving spouse and succession
The repayments of any debts or death expenses or liabilities of the estate come first. However, after the clarification of the aforementioned, The Wills and Succession Law (Cap 195), article 44, provides that in order for the estate to be disposed of to the relatives, the portion of the surviving spouse must be calculated since a prior share must be set aside for him/her. The spouse is entitled both the part of the statutory portion and the part of the disposable portion that may remain undisposed of, if any. The share of the spouse varies according to the degree of kinship of the surviving relatives. Thus:
- In case of a surviving spouse, while at the same time the deceased leaves children or descendants of children who had died before the death of the deceased, the statutory portion and undisposed portion is divided equally among the surviving spouse, the children and the descendants of children of the deceased who had died before the death of their parent, per stripes.
- In case of a surviving spouse at the time of the deceased’s death, while at the same time the deceased leaves no child or a descendant of a child, but at least one relative of the third class (namely aunt, uncle, grandparent, nephew) or closer, the surviving spouse is entitled to half of the statutory portion and undisposed portion.
- If the deceased leaves only relatives of the fourth class and a surviving spouse, the spouse is entitled to the three quarters of the statutory and undisposed portion.
- In case of a surviving spouse and no relatives within the fourth degree of kindred at the time of the deceased’s death, the spouse is entitled to the whole statutory and undisposed portion.
- If the deceased leaves two lawful surviving spouses, the share is equal.
- A. Succession of the kindred
After the calculation of the share of the spouse, the remaining portion is distributed to the relatives of the deceased according to the degree of kinship.
- If the deceased leaves children or descendants of children who had died before the death of the deceased, the statutory portion is divided equally among them. It must be noted that descendants of a deceased child are entitled to their parent’s share per stripes, meaning that those descendants are entitled to inherit equally the share that their deceased mother or father would have inherited if they had been alive. Moreover, as it has been mentioned, in case of a surviving spouse, the portion is divided equally among all of the aforementioned.
- If the deceased leaves no child or descendants of a child, but leaves parents, brothers and sisters (including half-brothers or half-sisters), the statutory portion is divided equally among all, except for the half-brothers or half-sisters who will receive half of the shares that the siblings will receive. Descendants of brothers and sisters who died during the lifetime of the deceased are also entitled to the share of the corresponding brother or sister, per stripes.
- If there are ancestors of the deceased who have equal degree of kindred –on both the mother’s and father’s side of the family- the statutory portion and undisposed portion is divided into two. Thus, each side is entitled to its half share and each individual is entitled to an equal proportion of his/her side’s proportion.
- If there are more than one member of the fourth class (namely first cousin, brother or sister of the deceased’s grandparent, grandson of the deceased’s brother), each receives an equal share.
- If there is neither a surviving spouse either loving relative within the sixth class, the statutory portion and undisposed portion is transferred to the government.
It is important to clarify that the relatives of one class exclude relatives of a subsequent class. For instance, if the deceased leaves a child and a sister, the statutory portion goes solely to the child.
What are the requirements for the Cyprus succession law to be applied?
The first criterion that must be examined is the domicile of the deceased since a deceased person must be domiciled in Cyprus at the time of his/her death in order for the Cyprus succession law to be applied.
- A. What does domicile mean?
Domicile is a wide notion; however, it could be defined as the place the deceased acknowledged as his/her permanent residence and where he/she had the intention to spend his rest of his/her life.
There are two types of domicile; the “domicile of origin” and “the domicile of choice”. The former refers to the place where the deceased was born. The latter refers to the country where the deceased moves to and adopts as the place where he/she wants to live in permanently. It is significant to be noted that a person cannot have two domiciles at a time. Thus, the definition of domicile is distinct from nationality or residence and can sometimes be complex to find.
However, the Cypriot domicile is not the only criterion for the Cyprus succession to be applied as the Cyprus law makes a distinction between movable and immovable property.
- B. Movable and Immovable Property
As soon as the matter of domicile is clarified, there is the need to divide the estate of the deceased into movable or immovable property as the law of succession is different for each category. The distinction between the two can be found in The Immovable Property Law, Cap. 224, Part I (s.2).
According to the statute law (Section 5 of Cap 195) and the common law (case Kochino v. Irfan 1976 1CLR 240), irrespective of the domicile of the deceased, the Cyprus law does not regulate any immovable property which is situated outside Cyprus, but only the immovable property in Cyprus, regardless of whether or not the deceased domiciled in Cyprus. As for the movable property, the statute and the common law provides that if the deceased had a Cypriot domicile, the Cyprus law applies irrespectively of the country that the movable property is situated in.
Administration of an estate of a deceased person
For the estate of a deceased person to be administered, the Court will appoint an administrator or two administrators in case one or more of the heirs are not adults. The administrator is usually a lawyer authorized by a close relative of the deceased such as a spouse or a child. The administrator has to pay all the debts, taxes, etc of the estate and distribute the net estate to the heirs of the deceased. The role of the administrator is rather complex as the work involved includes but is not limited to opening a bank account for the administration, filing several statements to Court, liaising with the tax authorities, publishing announcements in newspapers and a number of other duties.
Absence of inheritance tax
There is no inheritance tax in Cyprus as the Estate Duty (Amending Law) has been abolished in relation to individuals who passed away after the 1st of January of 2000. It could be argued that Cyprus law offers an attractive advantage to individuals coming from countries where the law imposes inheritance tax and therefore, those individuals could consider the idea of establishing a Cypriot domicile.
However, it must be noted that, as it has been mentioned above, Cyprus law does not regulate any immovable property which is situated outside Cyprus irrespective of the fact that the testator has a Cypriot domicile. Thus, in the case of a foreign person choosing to live the rest of their life in Cyprus and acquiring a Cypriot domicile, if they still have immovable property in the country of their previous domicile (domicile of origin), the Cypriot law does not apply for this property.
By: Danos & Associates