Writing a last will and testament can seem like something out of a movie – lost letters wrapped in ribbons, rediscovered relations and dramatic twists of fate, while the fate of families hangs in the balance…
But in the time of Corona, we wonder and worry about what might happen if… But what with all the forms and protocols, different in every country, it can seem daunting. The good news is, putting our affairs in order is not as difficult as it looks. And it takes a huge burden off our loved ones, helping us go gently into the night.
Whose law governs
For a start, you don’t strictly need a lawyer. In Austria, as in many other countries, a handwritten (not typed) and signed Last Will is valid. The formal criteria for a typed will, however, are more complicated, requiring a clearly discernible “affirmative formula.” But more of that later.
First, for Expats permanently living abroad must choose whether the law of their home country or their host country applies. To address this, an EU Succession Regulation that took effect in 2015 (affecting all member states except Denmark and Ireland) designated the competent court and law to be, unless otherwise provided, the one of the deceased person’s most recent “habitual residence.”
Even though this term is not precisely defined, it is assumed to apply, like the tax law, to expats “whose center of private and professional lives lies in the host country,” explained Christian Votava, an expert in international tax and inheritance law based in Vienna with Northcote Recht.
Still, you have a choice. “People can designate the law of their home country instead,” Votava said. So he urged looking at the options in good time, “so that arrangements are not left to chance.”
One issue that sets Austrian law apart is the Pflichtteilsrecht. Loosely translated as “forced inheritance,” it stipulates that close family members – spouses and descendants (until 1 Jan 2017 also parents and grandparents) have the legal right to a certain minimum, overriding potentially conflicting designations of the will writer. For example, if a spouse inherits along with children, the spouse receives one third, with the balance divided between the children.
Keeping property intact
Another challenge is keeping a family firm or a house intact. In the absence of a will, every family member has a claim to a certain percentage of the inheritance, which can force assets to be sold to pay out all the heirs.
This situation can be avoided by setting upwith consensual arrangements during your lifetime – for example, signing the house over to your son, in exchange for his share in the family firm, which would go to your daughter. You can, of course, carefully craft a testament Will that takes all these issues into account.
When your will is set up with a lawyer or notary, it is deposited in an official register, ensuring it will be found and applied.
One piece of good news – which applies both to Austrians and expats living here – is that inheritance and gift taxes were abolished in 2008. There is still, however, a land transfer tax on real estate, whose rates range from 0.5 to 3.5 percent, depending on the type of transfer, the value of the property and whether the transfer is to a close family member. The assessed value, long stuck at price levels of the 1970s, was recently increased in the Austrian fiscal reform in 2015/16.
Handling assets in countries that are not part of the EU Succession Regulation requires careful consideration, so it is important to ask for legal advice if you own an apartment in New York or London. With a legal Will, the proceedings are relatively problem-free, but without one, different legal codes may collide and cause trouble.
Choosing your carer
One crucial issue are the provisions made should you be later in need of care. The Austrian Vorsorgevollmacht is a signed, formal power of attorney, often including a health proxy. With this you can empower a named carer to make crucial medical decisions and to deal with public authorities, banks or insurance companies on your behalf in case you are no longer able to do so.
A Patientenverfügung (living will) sets out which life-sustaining measures you wish or do not wish to have, in case they are needed. Note also that all people residing in Austria are organ donors by default – unless you explicitly opt out.
Finally, professional care, for example in a nursing home or by a nurse at home, also costs money. Health insurance policies have different provisions as to what they are obliged to cover, so it is advisable to call your broker and check these provisions. When costs exceed coverage, the state steps in. But the government recoups expenses by seizing personal assets and, if this isn’t enough, it can hold children and parents liable.
It might not be the cheeriest subject, but giving careful consideration to the practical issues surrounding death when you’re still alive can provide clarity and closure. Ultimately, we all want to make it easier for our loved ones once we are gone.
The Steps to a Good Last Will
- Analyze your assets: Do you have a family business or home that you want to keep intact? Or are all your holdings in art, stocks and cash?
- Consider whether you want to write a Vorsorgevollmacht (power of attorney and health proxy) or Patientenverfügung (living will). Tell people about it.
- Look at the situation and needs of your family. Be mindful of the Pflichtteilsrecht when you decide to write a will and of the intestacy rules in absence of a last will & testament.
GOAL & PATH
- Set up a comprehensive and valid will, covering all crucial aspects of your life. Ideally, consult a lawyer to ensure all formal and legal questions are addressed properly.
- Depending on your situation, consider sitting down with your family and talking through what you have decided upon. It will make things clearer and help avoid future surprises or disputes.
- Evaluate your situation regularly – if your life situation changes considerably, it may also be a good idea to update your will.
WHAT TO AVOID
- Don’t get depressed. Writing your will does not mean your last hour has come, it is merely a responsible way of dealing with what is also a part of life.
- Don’t bury your head in the sand. Sorting this out is easier than you might think and it may save those close to you a lot of acrimony.
- Be careful not to confuse voiced wishes, even if on paper, for a will. The right form and legal validity is crucial if you want to get it right.
Disclaimer: This article originally appeared in our November 2016 issue about “Death in Vienna” and was updated in April 2020.