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There are a few basic things about inheritance law anyone from a European Union State living permanently in a foreign country – understood as the country in which they were not born or of which they do not have citizenship – should know. 

Since August 2015, the so-called Regulation No. 650/2012 of the European Union on applicable law in matters of inheritance has taken effect in the Member States of the European Union. This regulation, which by its nature is equally and directly applicable in all Member States, provides in its Article 21 that the entire succession of a person upon death is governed by the law of the State in which the deceased had his habitual residence at the time of his death. It applies in particular even if the deceased was domiciled outside the European Union at the time of his death. Article 22 of the Regulation, for its part, establishes a right of choice, according to which a person may choose the inheritance law of the State to which he or she belongs at the time of the choice or at the time of his or her death. 

This now means the following for a French citizen, e.g.: he may choose French law as the law applicable to his inheritance at any time, even if he lives, say, in Malaysia. However, if he does not make such a choice and lives, for example, in Malaysia at the time of his death, Malaysian law will apply to his inheritance. To the extent that this person owns assets (immovable property) in France, these will then be inherited under Malaysian law. The French courts or notaries would have to apply Malaysian law in this case. 

The first question that arises is therefore whether the deceased has made an effective choice of law. 

Instead of French law, the French citizen could also choose the law of his country of residence, Malaysia, and make a testamentary disposition under Malaysian law. He could do the latter even without choosing the law, provided he lives in Malaysia until the time of his death. For in this case, the basic rule would again take effect, according to which the applicable inheritance law is the one of the State of the last place of residence. 

If, on the other hand, this French citizen living in Malaysia wishes to make a will under French law, he must, if he has not already done so, make a mandatory choice of law in favour of French inheritance law. This could be done in the same document as the will. 

The will can be drafted at his home in Malaysia. It would then be advisable to draw up the will in the form of an international will in terms of the Washington Convention of 26 October 1973. This requires two witnesses who speak French and must be done before a French consular officer in Malaysia. 

There’s another fundamental point to consider. From a European point of view (see the European Regulation mentioned above), there is no division possible of the applicable inheritance law according to the location of the assets. This means that the French citizen in our example cannot, on the one hand, make a will under Malaysian law for assets located in Malaysia and make another one under French law for assets located in France. Rather, (still from a European point of view) the principle of universality of the applicable inheritance law applies, according to which all assets pass uniformly under one and the same law. Therefore, it is mandatory to make a decision as to whether the testator’s legacy should be governed by, in our example, Malaysian or French inheritance law. This choice of law then applies to all assets, i.e. those located in Malaysia as well as those located in France. 

As you certainly know, the civil law applicable to the succession says nothing about the taxation of the legacy. The choice of the applicable law of inheritance does not therefore indicate how and where the estate is to be taxed. These questions must be subjected to a detailed examination of the individual case. It makes sense to take them into account when drawing up the will.