On Reform of Estonian Succession Law
1. Overview of Reform of Estonian Succession Law
One can find only three words about the right to inherit in the Constitution of the Republic of Estonia passed by referendum on 28 June 1992: “The right to inherit is guaranteed” (§ 32(4) of the Constitution) *1 but how specifically the right to inherit is guaranteed and which are the underlying standpoints becomes clearer in the Law of Succession Act passed by the Riigikogu on 15 May 1996 (hereinafter LSA - RT I 1996, 38, 752), which entered into force on 1 January 1997. This article aims to highlight principle changes made in Estonian succession law compared with Soviet succession law that preceded it, and to determine, on the basis of the principles applied in our LSA, the position of Estonian succession law in continental Europe’s legal system.
Within comparative law, continental Europe’s legal system brings out four different groups or law families – that of the Roman, German, Scandinavian and socialist countries *2 . In giving a general characterisation of Estonian succession law it is, of course, possible to proceed from such a classification. Influences have certainly been disparate throughout history; at this point we should primarily mention Roman law, which is naturally the basis of continental Europe’s succession law. At the same time, in the light of single institutes and principles of succession we can classify different countries into rather dissimilar groups *3 .
The task of this article, however, is not to give a detailed overview of the entire history of Estonia’s succession law but rather to serve as a reminder of where we stopped in 1940 and where we had arrived by 1 January 1997.
Until 1940, i.e. until the Soviets came to power, relationships in private law were in Estonia regulated by the codification Liv-, Est- und Curlandisches Privatrecht which originated in main part in 1864, compiled by Professor Fr. G. Bunge. In Estonian legal literature it is known as the Baltic Private Act or BPA. The codification summarised the then legal norms which in large part were based on German law but also on Swedish law and local common law. BPA was with its 4600 articles one of the largest civil codes in the world.*4
After Estonia had become independent, work was started on a new civil code in the mid-1920s. Professor Jüri Uluots from the University of Tartu chaired the commission set up for this purpose. The Bill was developed on the basis of the valid BPA and the Bill of Civil Code of the Russian Empire plus the new acts which had been adopted during the period of Estonian independence. The German BGB, Swiss ZGB and OR, Hungarian Bill of Civil Code, French Code civil, Polish Bill of Civil Code, Italian Bill of Obligation Law, etc. served as foreign examples. The initial version of the Bill of Civil Code or BCC was completed in 1935 and the final version was ready by the end of 1939. On December 11, the Bill was submitted to the Riigikogu. Between January and March 1940 a special civil code committee of the Riigikogu prepared their additions and amendments and presented the Bill to the Riigikogu for adoption which was to occur at the autumn session 1940 but never did due to the occupation of the Republic of Estonia.*5
After Estonia’s restoration of independence, in October 1992, one of the first actions of the Riigikogu was to adopt a resolution on the consistency of legal drafting, which declared that bills of laws had to be prepared on the basis of the legislation that had been in force in the Republic of Estonia before 1940. Thus, BCC which had been completed by 1940 was taken as the primary basis for conducting the reform of private law. Today, when five of the six parts of Estonia’s Civil Code have been adopted (Law of Property Act, General Principles of the Civil Code Act, and Family Act which entered into force respectively on 1 December 1993, 1 September 1994, and 1 January 1995, and LSA), we can conclude that in reality the effect of BCC can mainly be felt in the law of property *6 and succession law *7 but virtually not at all in family law *8 where the influence of the Marriage and Family Code of the ESSR, in force as from 1970, is still prevalent. Whilst, rushing ahead we can say that LSA is not entirely free of the standpoints of Soviet succession law *9 .
Thus, the reform of Estonia’s succession law was built on BCC, as it was as of 1940, in which the related part was based, to an extent that could be felt, on the principles recognised by BPA, however, in certain parts BCC has rather similar provisions with BGB, in particular as regards the specification of intestate heirs but in other parts too. Consequently, the main task of the developers of the Bill of LSA was to review critically and, if necessary, rewrite the part of BCC concerning succession. Outdated provisions were cast aside and the Bill was harmonised with the parts of the civil code that were already in force*10 . The Bill was subjected to evaluation by German and Dutch experts. The comments and proposals made by the Dutch experts in their thorough and theoretically well-founded analysis were especially taken into account during the preparation of the final redaction of the Bill *11 , and this is can be felt primarily in the parts dealing with the forms and duration of wills.
2. Private Succession as a Principle of Succession Law
Private succession is one of the main principles of a private property based right to inherit the guarantee of which, as can be seen in the Estonian Constitution, is considered especially important in those countries which are based on private property *12 and it has been primarily in this respect that Western jurists have criticised Soviet succession law. *13 In applying the principle of private succession, a major breakthrough has occurred as a result of Estonia’s reform of succession law compared with the past fifty years. The right of the state and local government to gain property within the purview of LSA has been reduced to a minimum *14 compared with the Soviet law. *15 Primarily this means that, compared with the Civil Code of the ESSR where the definition of intestate heirs was very narrow – the children (in Estonia the right of representation remained effective until the great grandchildren of the bequeather), parents, grandparents, siblings and the surviving spouse of the bequeather. Besides these, the right to inherit of the bequeather’s so-called dependent was recognised. If there were not any of the above named, the estate transferred to the state. This meant that one could leave property to the children of one’s sister or brother or other more distant relatives only by will.
Under the current LSA, there are no legal restrictions on the descendants of a bequeather, hence the right of representation is formally indefinite, i.e. there are only natural boundaries. Similarly, the descendants of the bequeather’s siblings as well as the aunts and uncles and their descendants can succeed under the right of representation. As far as intestate heirs are concerned, the possibility that a local government may receive an estate has become negligible. But if we consider the fact that LSA holds on to the system of acceptance which has historically developed in Estonia, it may happen that not all the so-called potential heirs, especially distant relatives, do not get to know that they may present themselves as heirs.
Over the years, the principle of private succession, or the issue of the Extent of Succession, has been considered very important. This was emphasised in the 1930s in discussions on the role of BCC succession clauses in creating an incentive to encourage a person to work for his own benefit and that of those close to him *16 , a point raised again during the discussions of the Bill of LSA in the Riigikogu.*17
Thus, Estonia’s succession law has remained, in specifying the circle of heirs, within the boundaries recognised for example in Austria, Liechtenstein, Switzerland and the Nordic countries, i.e. the Act confines the circle of intestate heirs to the bequeather’s grandparents and their descendants. Besides relatives, the bequeather’s surviving spouse also has the right to succeed. The dependent, as recognised by Soviet law, has been excluded from amongst the intestate heirs. Today, following the example of BGB, the bequeather’s dependants have only the right to receive maintenance out of the inheritance and to continue using the objects of the shared household for one month after the death of the bequeather (§ 132 of LSA, § 1969 of BGB).
3. Private Autonomy or Freedom of Testament
The second very important principle of succession law is, of course, the principle of private autonomy, this primarily in recognising the freedom of testament in a possibly wider scope. The owner’s right of transfer also includes, in its broader sense, the right to make arrangements regarding his property in the event of his death. *18 In this respect too LSA is revolutionary compared to the previous laws.
Both the authors of the Bill of LSA and the Minister of Justice P. Varul have considered this latter fact the most important result of the reform of succession - expansion of the freedom of testament, i.e. that compared with previous periods vastly greater opportunities have been created for the bequeather to express his will *19 , primarily as regards the forms of expressing one’s last will. Besides the notarial will, which was the only form recognised by CC, it is now possible to make domestic or private wills; the spouses have now been granted the option of making a mutual will. LSA gives inheritance contract as a new basis of succession *20 . The Act allows noticeably greater possibilities as regards the content of a last will. For instance, now one can nominate a subsequent heir besides an alternative one; the bequeather has the right to prohibit the division of his inheritance by heirs for up to thirty years, etc. One can not discuss everything in detail here, thus this article will confine itself to a closer characterisation of the possible forms of wills, as in this way, we can highlight some features which are not characteristic of the Germanic legal model.
LSA recognises public or notarial and private or, according to the terminology of LSA, domestic wills (§ 20(1) of LSA) as legally valid. Notarial wills are in turn classified in two groups - notarised wills (public wills in the preparation of which a notary takes part) and wills deposited with a notary or, in theory, secret wills (§ 20(2) and §§ 21 and 22 of LSA). The latter is given personally by the testator to the notary in a sealed envelope and, thus, the notary does not take part in its preparation. Here it should be mentioned that under the Notary Offices Act (entered into force 1 November 1993 - RT I 1993, 45, 640; RT I 1998, 30, 411), in Estonia, a notary must give legal advice while performing a notarial act (§ 48 of NOA) and material responsibility extends also to notaries (§ 3(5) and § 20 of NOA).
LSA classifies domestic wills also in two (§ 20(3) of LSA). Firstly, a will signed in the presence of witnesses in which case it is not important who and in what form wrote the will. It is only important that there were at least two witnesses with active legal capacity who confirm by their signatures that the testator has active legal capacity and capacity to exercise will at the moment of signing the will (§ 23 of LSA). Secondly, a holographic will which must be written by the testator in his own handwriting and signed. Confirmation by witnesses is no longer a prerequisite for validity of the will (§ 24 of LSA).
Under LSA, all four forms of wills may be deemed ordinary wills, as the making of none of them is conditional upon any other provision of law. Thus, in essence there is no extraordinary will in Estonia’s succession law. However, this statement is not absolute as under LSA, domestic wills are characterised by one feature which in the rest of Europe is characteristic of extraordinary wills – their period if validity is restricted. Namely, a domestic will is valid only during six months from the date of its making. If the testator does not die within these six months or renew the domestic will or make a notarial will, such a will is deemed invalid (§ 25 of LSA).
The previously mentioned restriction on the validity of domestic wills was prescribed neither in BCC nor in the initial version of the Bill of LSA which underwent the first reading in the Riigikogu. This amendment was inserted upon recommendation of the Dutch scientists who, in their analysis, very thoroughly and convincingly highlighted the advantages of notarial wills and the dangers connected with domestic wills. To a certain extent, the fact that, during the past fifty years, legal practice had recognised only notarial wills also contributed.
A novelty of LSA compared with Soviet law, albeit not something new to Estonia, was the mutual will of spouses (§§ 87–92 of LSA). Here too it was confined, upon recommendation of the Dutch lawyers, only to the notarial form although the initial plan also included a domestic form, modelled upon BGB. LSA recognises only a joint correspective will as the mutual will of spouses. Thus, a mandatory feature of such a will is that the nomination of one spouse as a heir of the other spouse depends on the validity of nomination of the other spouse as a heir (§ 87 of LSA). *21
As mentioned above, LSA recognises on the territory of Estonia, after a fifty-year pause, inheritance contract as a basis of succession and as a form of expression of the last will of a bequeather (§§ 95–103 of LSA). The related part of the Act includes both positive inheritance contract, by which a person is nominated as a heir or legatee, as well as negative inheritance contract, under which the future heir, by agreement with the bequeather, renounces his future succession in advance. The option of contractual renunciation is reserved only for intestate heirs under LSA. Inheritance contracts may be with or without a charge.
Changes compared with what was valid previously occurred not only in the expansion of formatting options for the expression of one’s last will but also to a significant extent with regard to the content of the same. The Soviet law recognised only an alternative heir besides appointment of a heir and determination of legacy. To them LSA added the option of nominating an alternative legatee; LSA also recognises provisional and subsequent succession (§§ 43–53 of LSA). The testator can also in his last will create conditions for the transfer of his property in the event of his death (§§ 32-35 of LSA), the content of which, however, must not contradict laws and good customs but which were inconceivable under Soviet law. Although under Soviet law one could leave property for charitable causes, it was virtually impossible to create special funds from an inheritance. But LSA provides for this (§§ 5(5), 76–77 of LSA).
4. Principle of Succession in Family Law
In addition to the freedom of testament, succession in family law is naturally one of the most important principles of succession law. Without longer theoretical discussion, the specification of intestate heirs, as determined by LSA, can be characterised very shortly; viz. the system of parentelas recognised in the German law. The decision on preference was made during the preparation of BCC. For comparison purposes, it should be mentioned that the Latvian Civillicum, prepared at the same time, held to the system recognised in BPA.
Thus, according to Estonia’s succession law, succession occurs under parentelas and, within a parentela, succession is divided by generations whereas there are no legal restrictions on the right of representation of descendants. Under § 13 of LSA, first order heirs are the descendants of the bequeather. In the second order, the parents, and if there are no parents their descendants are the heirs (§ 14 of LSA) and the third order heirs are the grandparents of the bequeather and their descendants (§ 15 of LSA). The surviving spouse of the bequeather is not within the same circle of relatives but stands alongside the relatives. It means that the bequeather's surviving spouse shares the inheritance with the descendants – in which event the surviving spouse is entitled to an equal share with a child of the bequeather but not less than one-quarter of the inheritance. With second order heirs, the surviving spouse gets one-half of the inheritance plus a preferential share. With third order heirs, the surviving spouse also gets one-half of the inheritance but if any of the grandparents is bequeather, the surviving spouse shall also have his or her share. Here too the surviving spouse gets a preferential share, i.e. standard furnishings of the spouses’ matrimonial home unless the objects are accessories of an immovable (§§ 16–17 of LSA).
As can be seen from the above, in determining intestate heirs, LSA concurs with the regulation of BGB (as was intended already by BCC, from where the corresponding provisions were transferred virtually unchanged). The difference is probably only in that as far as relatives are concerned the Act limits itself to just three orders of succession and that the surviving spouse’s right to succession is somewhat simpler than in BGB. By way of comment, we should say that in determining the lawful right to inherit of the surviving spouse, the Act has returned to 1940 and does not take into account the changes that have occurred in Europe in the past decades. And if we draw more parallels with BGB, in Estonia, a surviving spouse has no right to preferential share alongside descendants. Thus, the law must be amended and complemented in this respect in the near future. *22
The notion of compulsory portion balances the principle of freedom of testament and succession in family law *23 . If once again we go back to history, the provisions of BPA that were valid in Estonia did not recognise compulsory succession. Compulsory succession was contained only in the part of BPA applicable to Kurland. This notion, however, was included in BCC, following the example of German law. *24 Soviet law also recognised succession to compulsory portion. But compared with Soviet succession law, the compulsory share was now reduced – the two-thirds portion previously available was now reduced to one-half. But as in the Soviet law, the compulsory share is a real portion of the inheritance in the meaning of LSA and not a monetary claim to an equivalent extent as it is in German law.
Here it must be mentioned that despite the clear criticism of the Dutch lawyers, LSA held, in determining the right for compulsory portion, to the requirement of incapacity for work that is familiar from the Soviet law. Thus, under § 104 of LSA, only those lawful descendants and ascendants and the surviving spouse of the bequeather who are incapacitated for work at the time of opening of succession are entitled to succeed to the compulsory portion.
A new principle compared with the Soviet law in specification of the amount of compulsory portion is that, modelled upon German law, the provisional successions and gifts made by the bequeather to other persons within the last three years before the death of the bequeather for the purpose of reducing the compulsory portion are also considered part of the inheritance (§ 106 of LSA).
While under the Soviet law a bequeather could not exclude the person entitled to succession by will and the deprivation of compulsory portion could occur only upon general bases, i.e. due to unworthiness to succeed, LSA gives the bequeather in certain cases the option to disinherit a potential succession of a compulsory portion (§ 108 of LSA).
5. Principle of Universal Succession and Principle of Transfer of Liability
Under continental Europe’s succession law, the principle of universal succession is also an important principle. It means that a succession transfers to the heirs as a whole and that the heir does not have the right to choose at his discretion which he accepts and which he does not accept from the inheritance. Here the unity of assets and liabilities of an inheritance is given, i.e. the bequeather’s debts transfer to the heir together with the positive assets or rights of the bequeather.
Soviet law similarly recognised the principle of universal succession but had exclusions, such as the leaving of bank deposits or inheritance of domestic assets (§§ 565 and 538 of CC of ESSR). Compared with LSA it distinguished between legacy (single succession) and heir (universal succession) differently primarily because Soviet law knew only limited liability of heirs, i.e. a heir was liable for the debts of the bequeather to the extent of the actual value of the succession transferred to him (§ 558 of CC).
As a rule, LSA recognises unlimited liability of a heir, i.e. unless the heir accepts the inheritance with an inventory, the heir is liable with their personal assets for those liabilities of the bequeather for which the inheritance is insufficient for payment (§ 130 of LSA). At the same time the legatee is liable only for the fulfilment of obligations on the object of legacy. Therefore, it is necessary to determine expressly by LSA which of the bequeather’s intestate heirs is a heir and which is a legatee. Under § 37 of LSA, the heir is the person to whom a testator leaves all his property or a legal share (fraction) of it and under § 54 a legatee is a person to whom not all the bequeather’s property or legal share of it is given but who gains a particular proprietary benefit, i.e. either a concrete thing, sum of money, right or exemption from an obligation.
As mentioned above, in Estonia, an inheritance is not transferred to the heirs automatically at the moment of death, as for instance in Germany, Switzerland, France, but the Estonian right to inherit retained its historical tradition of transfer of an inheritance according to the acceptance system. The rationale being that the system of acceptance is historically more inherent in Estonia, BPA was based on it, BCC intended to use it and such was the regulation in CC. *25 Thus was retained a system of acceptance which very much resembles its predecessor.
Under such a succession system, succession which has opened but has not transferred to heirs is created (hereditas iacens). BCC prescribed that hereditas iacens was to be deemed a legal person (§ 567). Even then the expediency of this provision was doubted (Õigus 1938, pp. 386-389). Such a structure of a legal person was not included in the Bill of LSA. The standpoint was that the preservation of an inheritance is guaranteed by the methods of depositing the inheritance and that via the custodian of the inheritance the rights and obligations included in the inheritance can be respectively used and fulfilled.*26
Thus, in conclusion it can be said that Estonia’s succession law has returned to the German law family and is in its regulation quite similar to BGB, albeit not in every respect. For instance, as far as the inheritance contract is concerned there are more similarities with the Austrian and Swiss law of succession.
At the same time, Estonia’s succession law has preserved the system of acceptance in respect of the transfer of inheritance which is historically characteristic of Estonia. Similarly, in the rules for execution of wills, the influence of the opinions of the Dutch lawyers who evaluated LSA can be seen. But something has been directly incorporated from the Soviet law – the requirement of incapacity for work as a precondition of receiving the compulsory portion.