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Forced Heirship

Forced Heirship
Forced Heirship, herein further referred to as forced inheritance could be described as a limitation or restriction on the freedom to decide or bequeath an estate, by means of a will, trust or private foundation.

These rules provide that, at death, a certain percentage or part of an estate must be transferred to the (forced) heirs of the deceased.

It is important to note the difference between common law and civil law jurisdictions when it comes to forced inheritance. Forced inheritance is a civil law concept found upon the Roman legal tradition. Examples of civil law jurisdictions include most Western European and Latin American countries.

This Roman legal system differs dramatically from the trust concept of inheritance in common law, which emerged during the Middle Ages in England. Examples of common law countries include UK,USA, Canada, New Zealand, Australia, and other countries in the British Commonwealth. Under the common law trust concept, there are hardly any restrictions when it comes to the disposition of an estate after death. In other words, under the common law trust concept, one is free to decide who will become the beneficiaries of his estate, after his death, and under what circumstances.

Not only in the Western Christian legal tradition of civil law does one find forced inheritance rules but also in Sharia. Sharia is the body of Islamic religious laws that provide guidelines and rules for a Muslims’ day-to-day life and in Sharia there also are forced inheritance provisions. There is no single, consolidated, codified set of laws for specific guidance but, instead, Sharia comprises a diverse body of principles derived from a combination of sources, including the Qur’an (the Muslim holy book), the Hadith (sayings and conduct of the Prophet Mohammed) and Fatwas (the rulings of Islamic scholars).

One of the main differences between Sharia and other forced inheritance systems is that under Sharia there is no concept of applying the governing law of a deceased Muslim’s domicile to the succession of his or her estate. Under Sharia there are very precise and detailed rules for the division and distribution of an inheritance. One of these principles refers to males and females of equal degree and class and stipulates that a son inherits a share equivalent to that of two daughters.

When arranging estate planning, it is important to analyze the laws of the country where the assets are located as well as the country where the settlor (the one for whom the planning is being made) lives. This analysis is needed to determine if there are eventual forced inheritance rules that need to be considered.

If it turns out that the jurisdiction in which the assets are situated and/or the settlor resides contains forced inheritance rules, care must be exercised to observe and respect these rules.

Alternatively, one could domicile the legal tool to be used (a trust or private foundation) in a country without forced inheritance rules, or even one with strong anti-forced inheritance provisions. In practice anti-forced inheritance provisions means that the jurisdiction in which the settlor’s estate is established could reject the execution of rulings and/or court orders from foreign judges from jurisdictions that have forced-inheritance rules. The percentage of the assets that must go to the forced heirs differs from country to country and, at times, these could also include gifts or gratuitous transfers made during the settlor’s lifetime.

Typically the estate is divided in two portions:
1) a first portion which must go to the deceased descendants (forced heirs) and
2) a free or discretionary portion, which can be disposed of freely by means of a will or other estate planning tools.

A consequence of violating or not respecting of forced inheritance rules is that the deprived heir can bring legal action against the excessive inheritance provisions to receive his or her legally enforced share of the inheritance, which may also include benefits received by third parties during the lifetime of the deceased.

Estate planning is essential. It helps ensure a smooth transition to the next generation, keeps the family united, and provides for your personal wishes to be considered. However, as has been clearly laid out, the issue of forced inheritance rules emphasizes the need to rely upon qualified professionals in the drafting and execution of your estate plan to avoid such pitfalls.

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