Most of us don’t like to think about the end of our days. But getting our affairs in order in time can be a huge relief for all parties
Writing a last will and testament can seem like something out of a movie – where dramatic twists of fate might force a protagonist to reconsider her heirs, or documents mysteriously disappear, to the delight of some and the chagrin of others.
The fact is that arranging for our afterlife is not as difficult as it would appear. And it takes a potentially huge burden from our loved ones, helping us go gently into the night.
Die Another Place
When writing a testament, it is always advisable to consult a lawyer. To be sure, 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, can be tricky – among other things, the testament must contain a clearly discernible “affirmative formula.”
Expats permanently living abroad face some peculiar legal questions, most prominently whether the law of their home country or their host country applies. That is why the EU passed a Succession Regulation that entered into force in 2015 and applies in all member states except the U.K., Denmark and Ireland. Since then, when someone passes away, the competent court – and thus also the national law that is applicable – is generally the one of the deceased person’s most recent “habitual residence.”
Even though this term is not defined, it is safe to assume that it applies to expats “whose center of their private and professional lives lies in the host country,” explains Christian Votava, an expert in international tax and inheritance law based in Vienna with Northcote Recht.
“However, people can, in the form of a will, choose the law of their home country instead,” he adds. “That’s why it’s a good idea to look at all the options in time, so that arrangements can be made according to your own will, and are not left to chance.”
One issue that sets Austrian law apart from that of other countries is the Pflichtteilsrecht. Loosely translated as “forced heirship” it postulates that close family members – spouses and descendants (until 1 Jan 2017 also parents and grandparents) have the legal right to a certain minimum part of the inheritance, overriding potentially conflicting wishes in a last will and testament.
How to keep the family home
Another salient topic is how to keep 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. It can mean that assets may have to be sold to pay out all the heirs.
This situation can be avoided by setting up consensual arrangements during your lifetime – for example, signing the house over to your son. In return, get him to relinquish his share in the family firm, which will go to your daughter one day.
You can, of course, carefully craft a testament that takes all these issues into account. And 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.
Conveniently for Austrians and expats living here, inheritance and gift taxes were abolished in 2008. However, you do have to pay a land transfer tax when transferring real estate. The rates range from 0.5 to 3.5 percent, depending, among other factors, on the type of transfer, the value of the property and whether the transfer is made to a close family member. The assessed worth, which was for decades stuck at price levels of the 1970s, was recently increased as a result of the Austrian fiscal reform in 2015/16.
Handling assets in countries that are not part of the EU Succession Regulation requires careful consideration, which is why it is important to ask for legal advice when you own an apartment in New York or London, for example. Usually, the proceedings even in these cases are relatively problem-free, but without a valid testament, different legal codes may collide and cause trouble.
Choosing your carer
One crucial issue that is easily forgotten is to make provisions in case you end up 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 clearform content.
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.