Wills: When Should They be Drawn Up and What Are Some Potential Complications?

The succession of the estate of a deceased individual is mainly regulated in Cyprus by the Wills and Succession Law (Cap 195) and the Administration of Estates Law, Cap 189. The former governs wills and their enforceability in Cyprus. Cap. 195 applies to the estate of any deceased individual who, at the time of their passing, maintained their domicile in Cyprus. Specifically, the Law pertains to the movable and immovable property of a person domiciled in Cyprus and mainly Cyprus-situs immovable property, irrespective of the deceased’s domicile at the time of death.

It is worth noting that Cyprus has implemented the “forced heirship regime” which serves as a rigid restriction to one’s testamentary liberty, ultimately aiming to protect the rights of the spouse, children or parents of the deceased by rendering them automatically entitled to inheriting their designated portion of the estate. Therefore, the said regime places limitations on the way a testator’s property can be disposed of, even in the presence of a will. The forced heirship regime applies to anyone who is domiciled in or is a permanent resident of Cyprus, irrespective of their nationality.

Testators are at liberty to distribute the “disposable portion” of their estate by virtue of a will as they wish; whereas the “statutory portion” of the estate is strictly reserved and disposed of by default to the legitimate heirs of the deceased. If the disposable portion allocated by a will exceeds the limit set by law regarding the net estate, the heirs can contest the will. Additionally, the Court has the authority to adjust the disposable portion to align with the legal limit that should have been distributed by the will.

More specifically, if the testator has left a spouse or children or a spouse and grandchildren (in case the deceased’s children have predeceased them), then the statutory portion will be limited to 1/4 of the estate. If the testator leaves behind a spouse or parents but did not have any children, then the statutory portion will be limited to 1/2 of the estate. In case the testator has not left behind any legitimate heirs, then the disposable portion through a will, will expand to the entirety of their estate.

In stark contrast, common law jurisdictions generally uphold the principle of “testamentary freedom”, allowing testators to distribute their assets as they wish. The historical hybridity of the Cypriot legal system, i.e. the merger of common law and civil law principles, is evident in that the said hybrid Cypriot legal system allows for a degree of testamentary freedom, much like English law, whilst also recognizing the rigid concept of forced heirship pursuant to civil law principles and, quite notably, Islamic jurisdictions.

Remarkably, Cyprus residents have the choice to proceed with setting up a Trust for the purpose of ensuring that certain assets do not form part of the resident’s estate upon death, thus circumventing the restrictions on freedom of testation that is, forced heirship.

In reference to the rigidity of Cap. 195, it is worth noting that the said Law provides for strict legal requirements with regard to the validity of a will in Cyprus and if those formalities are not adhered to, then this will lead to the will being rendered invalid and of no legal effect. Accordingly, the effective revocation of a will requires strict compliance with the provisions of the Law, thus calling for cautious observance of the same.

The disposable portion of the estate can only be ascertained at the time of death and not on the day of execution of the will. Furthermore, the status of the heir is crystallized only upon death of the testator and thus cannot be claimed or renounced ante-mortem.

In the event of intestacy, that is death in the absence of a will, the immovable property located in Cyprus of the deceased is distributed according to the intestacy rules of Cyprus law which dictate the distribution of the estate to the legitimate heirs in equal shares, depending on their degree of kinship to the deceased.

That said, although a separate will in Cyprus is strongly recommended to govern assets located in Cyprus (despite the recognition of foreign wills by Cypriot law) as well as to ensure the distribution of the disposable portion as per the testator’s wishes in the event of imminent death due to terminal illness or relocation or asset acquisition or changes in family dynamics (i.e., deaths, estrangements, births and/or divorce which may necessitate drafting and/or updating a will), it is not mandatory to be drafted under Cyprus law.

It is worth noting that life changes require updates to a will already drafted to reflect changing circumstances. Failure to do so can lead to complications, such as unintended beneficiaries or outdated instructions. Ambiguities or perceived unfairness in a will could potentially lead to disputes among beneficiaries, potentially resulting in legal challenges. Should an individual proceed with drafting a will in Cyprus, the choice of an appropriate and willing Executor will be critical, as this individual will manage the estate’s distribution postmortem.

Evidently, the deceased’s domicile is crucial in triggering the application of Cap. 195 with respect to the deceased’s estate, regardless of nationality. Nevertheless, this principle is subject to whether Regulation 650/12 is enforceable or not, which could ultimately bypass the rigid forced heirship regime subject to certain conditions.

By virtue of Regulation 650/12, EU citizens are enabled to select the jurisdiction which is to govern the distribution of their estate, thus preventing the ‘forced heirship’ regime from applying. In cross-border successions, EU citizens are entitled to select the jurisdiction of their country of origin as the jurisdiction applicable to their estate if they wish, instead of Cyprus law; provided that this preference is expressly made in their will, otherwise, Cyprus succession law will apply and as such, their estate at the time of death will automatically be subject to Cyprus law, including its forced heirship rules.

In summary, drafting a will in Cyprus involves thoroughly navigating the Wills and Succession Law (Cap. 195), particularly with regard to the forced heirship regime. To ensure that one’s estate is distributed according to one’s wishes while complying with legal restrictions, it is crucial to consider setting up a separate will for assets in Cyprus, updating it as circumstances change, and possibly utilising EU Regulation 650/12 if enforceable, to select a preferred jurisdiction. Careful planning and adherence to legal requirements as well as seeking legal advice can help prevent disputes and ensure a smooth succession process.

By Katerina Krassa and Annabelle Antoniades, Advocates/Associates, Real Estate & Immigration Law Dept, Head Office, Elias Neocleous & Co LLC

(This article first appeared in the 2024 edition of The Cyprus Journal of Wealth Management, commissioned by Eurobank Cyprus and published by IMH. Click here to view the article. Click here to view the entire magazine online.)