LUXEMBOURG Law and Practice Contributed by: Frédéric Feyten, Alejandro Dominguez Becerra, Gérard Maîtrejean and Pawel Hermeliński, CMS
the bare owner. This system is designed to reflect the economic value of the rights transferred. The value of usufruct and bare ownership is calculated as a pro - portion of the full ownership value. This proportion varies depending on the age of the usufructuary or the bare owner on a digressive basis (ie, the younger the person the higher the fair market value allocated to the usufruct and the lower the value to the bare ownership). Therefore, Luxembourg may be a favourable jurisdic - tion for succession planning. In addition, it should be noted that Luxembourg applies the European Union Succession Regulation dated 4 July 2012, whose aim is to harmonise and simplify cross-border successions across European Union countries (except for Ireland and Denmark) to avoid the complications and conflicts of law that would typically arise in these type of successions. According to it, the applicable law to the entirety of an estate will be the law of the country in which the deceased had their habitual residence at the time of their death, unless the latter has chosen the law of the country of which they are a national at the time when they make their choice or at the time of their death. This is in the direct line of recommendations made in 2011 by the European Commission for unilateral relief measures by member states to avoid double taxation in matters of inheritance. 2.3 Forced Heirship Laws In the absence of a Will, the order of succession is as follows. • The descendants, ie, the existing child(ren). • The surviving spouse. • The privileged ascendants and collaterals – ie, the father and mother, brother(s) and sister(s). • The ascendants other than the father and mother. • The collaterals other than the brother(s) and sister(s) of the deceased and the descendants of the latter. The descendants are therefore the priority heirs. If the deceased has a surviving spouse, the latter will be entitled to:
• a share of a legitimate child, the least taking, in full ownership without it being less than one-quarter of the estate; or • the usufruct of the immovable common to the spouses as well as the furniture therein, provided that the building belonged to the deceased in full or jointly with the surviving spouse. If the couple does not have children, the spouse will benefit from the entire estate in full ownership. As for ascendants and collateral heirs, they only have inheritance rights if there are no descendants or sur - viving spouses. However, the surviving spouse, as well as ascend - ants or collateral heirs, may be disinherited by the deceased in their Will. The representation allows the descendants of a per - son who would have inherited the deceased if this person had survived to take that person’s place in the inheritance. The children of the predeceased person will share the part that would have been given to this person. The fact that all the assets of the deceased are trans - ferred to their heirs simply by opening the estate does not imply that they are required to accept the suc - cession. Heirs have, indeed, different options regard - ing the succession. They may accept the succession purely and simply, accept it under benefit of inventory, renounce or even contest it. 2.4 Marital Property In Luxembourg, all married couples are compulsorily subject to a matrimonial regime which constitutes a set of rules governing the pecuniary interests of the spouses and whose object is to settle the fate of their property as well as their debts during, and upon the dissolution of, the marriage. Spouses who have not concluded a marriage contract are subject to the regime of the community of property regime. However, they are free to choose and change their matrimonial regime before and during marriage.
332 CHAMBERS.COM
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