Introduction to Relevant Laws
Under Cyprus Law, there are three main Acts which govern the field of Wills and Succession. These are as follows:
- The Wills and Succession Law, Cap 195, which regulates the law in respect to wills and succession;
- The Administration of Estates Law, Cap 189, which regulates the procedure regarding the evidence and the execution of wills and the administration of the estate of the deceased and
- The Probates (Re-Sealing) Law, Cap 192, which is applicable in cases where the deceased passed away in UK or in another Commonwealth country and at the time of his death he had property in Cyprus. Specifically, Cap 192 regulates the procedure by which the Cyprus Courts re-seal the Letters of Administration or the Grant of Probate which was issued by courts in UK or in any Commonwealth country and an administrator is appointed for the estate of the deceased located in Cyprus.
When is Cyprus Law Applicable?
Generally, in order for the Cyprus Wills and Succession law to be applicable, the deceased must be domiciled in Cyprus at the time of his/her death. However, under certain cases, Cyprus law may be applied and regulate succession of movable property that is situated in Cyprus, even though the deceased had his/her domiciled aboard.
What is the concept of “Domicile”?
Although the term “Domicile” is a broad concept, distinct from nationality or residence, it can generally be defined as the place the deceased person considered as his permanent residence and where he had the intention to spend the rest of his life.
There are two kinds of domicile, the “domicile of origin” and the “domicile of choice”. The domicile of origin is typically the easiest one to establish, as it refers to the place where the deceased was born. The deceased adopts a domicile of choice if he moves to another country and he adopts the domicile of that place. However, until he adopts the domicile of choice, he is considered to still possess the domicile of his origin. A person is only allowed to have one domicile at a time.
The “domicile of choice” will typically invoke problems, as it needs to be proven that the deceased considered this to be his domicile and he had the intention of spending the rest of his life in the country to which he had moved.
Distinction between Movable and Immovable Property
Upon resolving the matter of “Domicile” for the deceased, the next step is to divide his estate into “Immovable Property” and “Movable Property”. This classification is important, as the law of succession is different for each category.
The term “Immovable property” has been defined in the same way it is defined in The Immovable Property Law, CAP 224 which includes, land, buildings, trees, sources, trusts, easements etc, whereas the term “Movable property” includes any other property which does not fall under the category of Immovable Property.
According to section 5 of CAP 195, and the case Kochino v Irfan (1976) 1 CLR 240, irrespective of whether the person has a Cypriot domicile, Cyprus Law:
- does not regulate any immovable property which is situated outside Cyprus;
- regulates the immovable property which is situated in Cyprus irrespective of where the domicile of the deceased is found; and
- regulates all the movable property anywhere in the world of the deceased who has a Cypriot domicile.
It is also worth noting that according to section 12 cap 195, succession to movable property of a deceased whose death took place in Cyprus but has another country’s domicile, will be regulated by the country’s law who has its domicile.
Lastly, it must be noted that the applicable law which regulates the will of the deceased is the Law which is in force at the time of his death.
Methods of Distribution of the Estate
According to the Wills and Succession Law, Cap 195, and Section 21 therein, a person may distribute his estate in two ways:
- According to the law of succession, or
- By drafting a will.
A will is a written legal declaration expressing the wishes of the testator regarding the distribution of his estate after his death.
However, it must be emphasized that a testator’s whole estate cannot be distributed solely according to his will. Restrictions are imposed under Section 41(1) of Cap 195 on testators in distributing their estate, i.e. “the disposable portion” verified at the day of his death when he has a spouse or children.
The remaining of his estate, being “the statutory portion”, will be distributed according to Law. The basic principle behind maintaining the “statutory portion” is to protect close relatives such as children and spouse.
It is also noted that, in the event that no Will is left by the deceased (and/or no valid Will is left) the rules as to the distribution of the statutory portion will be applicable on the whole estate.
As the verification will only occur on the day of the death of the deceased, it is not uncommon that a Will (which might have been drafted a few years back), will contain provisions which distribute more than the disposable portion the deceased is allowed to distribute. In such an event, the disposable portion will be reduced and limited down to the portion he is allowed to distribute, and the difference will be distributed in accordance with the distribution mechanism of the statutory portion.
It is noted that prior to July 2015, there was an exception to this general rule, and the concept of statutory portion (or “Forced Heirship”) did not apply to any person who he or his father was born in UK or in most of the Commonwealth countries as they were allowed to dispose the whole of their estate as to their wishes. However, Law 96(I) of 2015 withdrew this exemption and the forced heirship provisions now apply to anyone who dies while being domiciled in Cyprus and to the succession to any immovable property located in Cyprus, regardless of the domicile of the deceased person.
Calculation of the “Disposable Portion”
The actual proportion of the net estate taken up by the Statutory Portion varies according to which relatives survive the deceased person, as follows:
- If an individual dies leaving a living child or a descendant of a child, the statutory portion amounts to three quarters (75%) of the net value of the estate;
- If the individual is survived by a spouse or a parent, but not by any children or their descendants, the statutory portion is half (50%) the value of the net estate;
- If the individual leaves no surviving spouse, parent, child or descendant of a child, the statutory portion is reduced to nil (0%) and all the estate may be disposed of by will in its entirety.
The statutory portion is divided according to the rules set out in the Wills and Succession Law, which also apply in the absence of a valid will or to any part of the estate not otherwise disposed of.
Categories of Relatives Entitled to Statutory Portion
These are divided into four classes, as follows:
- The first class comprises the children of the deceased who are living at the date of his or her death, together with the surviving descendants of any of the deceased’s children who died in his or her lifetime;
- The second class comprises the parents of the deceased (or if the parents are dead, the nearest living ancestor) and the brothers and sisters (including half-brothers and half-sisters) of the deceased, together with the surviving descendants of brothers or sisters (including half-brothers and half-sisters) who died in the deceased’s lifetime;
- The third class comprises the nearest ancestors of the deceased living at the time of his or her death; and
- The fourth class comprises the nearest other relatives of the deceased living at the time of his or her death, up to the sixth degree of kindred (more remote relatives are excluded).
The persons of one class exclude persons of a subsequent class. As such, if the deceased person is survived by a child and a brother, the statutory portion of the estate goes exclusively to the child.
Distribution of the Statutory Portion
Within each of the above-mentioned classes, there are specific rules for the share to be received by an individual class member, as follows:
- Living children of the deceased are all entitled to an equal share and descendants of a deceased child are entitled to that child’s share per stirpes.
- Surviving parents, brothers and sisters (including half-brothers or half-sisters) of the deceased are all entitled to an equal share. Descendants of brothers and sisters who died in the lifetime of the deceased are entitled to the share of the brother or sister concerned, per stirpes.
- If there are ancestors of equal degree of kindred on both the mother’s and the father’s side of the family, the statutory portion and undisposed portion is divided into two. Each side of the family is entitled to its half share, and each individual takes an equal percentage of his or her side’s share.
- If there are two or more members of the fourth class, each receives an equal share.
- If the deceased person has no surviving spouse and no living relative within the sixth degree of kindred, the statutory portion and undisposed portion become the property of the government.
Distribution to the Spouse
Where the deceased leaves a surviving spouse, a prior share must be set aside for him or her before arriving at the statutory portion. This share varies according to the number and closeness of relations entitled to the statutory portion, as follows:
- If the deceased leaves children (or descendants of children of the deceased who died in his or her lifetime), the statutory portion and undisposed portion is divided equally among the surviving spouse, the living children and the descendants of children who died in the lifetime of the deceased, per stirpes.
- If the deceased leaves no child (or descendant of a child), but at least one relative of the third degree of kindred (great grandparent, aunt, uncle, nephew or niece) or closer, the surviving spouse is entitled to half the statutory portion and undisposed portion.
- If the deceased leaves only relatives of the fourth degree of kindred (great great grandparent, great aunt, great uncle, first cousin, grand nephew or grand niece), the surviving spouse is entitled to three quarters of the statutory portion and undisposed portion.
- If the deceased leaves no relative within the fourth degree of kindred, the surviving spouse is entitled to the entire statutory portion and undisposed portion.
- If the deceased left more than one lawful wife, the surviving spouse’s share is divided equally among them.
Requirements for a Valid Will
A will is a legal instrument by which a person specifies the method to be applied to the management and distribution of his estate after he has died. In some jurisdictions, such as the UK, every person (upon reaching a certain age, usually 18) who is of sound mind can make a will to determine who will inherit all of their assets when they die. The concept ‘sound mind’ has a broad meaning; it does not only include people that suffer from a mental disease but also people whose mental health has been affected by advanced age or otherwise. It must be proved that at the material time of the execution of the will, the testator is in a state where he undoubtedly perceives what kind of legal document he signs and what kinds of rights are being derived from that document.
Wills are precise documents, whether they cover the entirety or a portion of a persons estate. There are formalities which must be complied with (for instance with regards to witnesses, signature, contents and registration) in order for the document to be valid. It is for this reason that it is highly advisable to instruct a lawyer to draft such a document on your behalf.
In general, a will must be in writing and must be executed in a certain way, the key requirements being the following:
- it must be signed at the bottom or at the end by the testator or by someone else who acts on behalf of the testator in his presence and by his command;
- the signature must be put or must be acknowledged by the testator in the presence of two or more witnesses who must be present at the same time;
- the said witnesses must attest and countersign the will in the presence of the testator and in the presence of each other;
- the witnesses must be age 18, or above, must be of sound mind and they must also be able to sign their names; and
- each sheet of the will must be signed or be initialed by or on behalf of the testator and the witnesses.
A Will, or any part of a Will, is void and without legal effect if it is drawn up by duress, fraud or undue influence.
Can a Will be Revoked?
- A Will may be revoked by a subsequent will which expressly revoke the previous one.
- A Will may also be revoked by a subsequent Will which is inconsistent with the provisions of the previous Will, to the extent that the provisions of the Wills are inconsistent.
- A Will may be revoked by burning, tearing or by any other means of destruction by the testator or by any other person in the presence and by the direction of the testator. The said actions must be made with the intention to revoke the will.
Furthermore, a Will is deemed to be revoked in cases where the testator gets married after the execution of the Will. A Will might also be deemed to be revoked in cases where the first born child of the testator is born after the execution of the Will. However, such marriage and birth shall not be deemed to revoke the Will, if it is clear that the Will was made with the prospect of the marriage and birth.
Taxation of Inheritance
There are no succession taxes such as inheritance tax in Cyprus for deaths which occurred on or after 1/1/2000. For this reason, it can be highly beneficial for those persons coming from countries which apply significant inheritance taxes to consider whether they should establish Cypriot domicile, although local inheritance tax may still apply on assets held in the relevant country of original domicile.
Estate Administration
When a deceased dies intestate, the Court may authorize one or more persons to administrate the estate of the said deceased. In order for this to happen, the said persons should first file with the Registry of the Court a relevant application and the Court will grant them with the “letters of administration”.
Where a person has drawn up a will, he/she may appoint the executor(s) of the will. The appointed executors or other persons who are entitled to issue probate or to be granted with letters of administration with will annexed, shall file a relative application to the Registry of the Court.
The above applications must be filed to the Registry of the District Court where the deceased had his/her place of permanent residence at the time of his/her death.
The application must, at a minimum, contain all the personal information of the heirs of the deceased (such as their names and their relationship with the deceased) and also the description and the value of the movable and immovable property of the deceased. Furthermore, the person applying for the granting of the letters of administration must swore by an affidavit about the date of death of the deceased and the estimated value of the property and that he/she will administrate the estate of the deceased according to the law. Lastly, a separate person has to sign an affidavit as a guarantor of the right and according to the law administration of the deceased’s estate by the person applying for the granting of the letters of administration.