Right to the reserved portion under Maltese law of succession

ARTICLE

20 Dec 2020

 

What is the Reserved Portion in Maltese succession law?

Act XVIII of 2004 (“Act”), which came into effect on 1st March 2005, amended certain provisions of the Civil Code governing succession. In this article, any reference to the Law prior to the introduction of Act XVIII of 2004 will be referred to as the “Old Law”, whereas any reference to the Law as it stands today, will be referred to as the “New Law”.

This is being clarified as the Old Law is still applicable to wills that were drawn up prior to the introduction of the Act, so one must know which regime is applicable, in order to know what portion (if any) is by law reserved to certain individuals (“Reserved Portion”) on one’s own demise or on the demise of a relative.

The first thing to note is that the term ‘Reserved Portion’ was introduced following the changes brought about by the Act.

Prior to this, the law did not make any reference to such a term but referred to the term ‘legitim (“il-leġittima” in Maltese) instead.

The Reserved Portion is a portion of the deceased’s estate which is by law reserved in favour of a particular person/s. In practice, the Reserved Portion does not form part of the disposable portion of an estate, but forms part of what is referred to as the non-disposable portion of an estate.

Even in cases of testate succession (i.e., succession by virtue of a will) where the testator would have liked to leave all of his estate to a specific person, it may be the case that a portion of the estate would still, by law, be reserved to somebody else.

For all intents and purposes, under the New Law, the Reserved Portion is a right of credit against the estate of the deceased.

Interest shall accrue on such credit from the date of the opening of succession if the Reserved Portion is claimed within two (2) years from such date, or from the date of service of a judicial act if a claim is made after the expiration of the two (2) year period. The Reserved Portion is due without any burden or condition and is to be calculated on the deceased’s whole estate after having deducted any debts due by the estate, along with the funeral expenses incurred.

Under the New Law, persons entitled to the Reserved Portion are to impute all things that they may have received from the testator. Furthermore, a person claiming the Reserved Portion shall take into account his share in any property that was bequeathed to him/her by will. Such persons cannot renounce any testamentary disposition in their favour, whilst claiming the Reserved Portion, unless a testamentary disposition is made in usufruct or consists in the right of use or habitation or consists of a life annuity or an annuity for a limited time.

One should note that it is possible for an heir to renounce a succession whilst still demanding the right to receive the Reserved Portion due to him by law. This must however be made in an express manner.

Also, to note, is that an action to claim the Reserved Portion shall lapse on the expiration of ten (10) years from the day of the opening of succession.

Who is entitled to the Reserved Portion?

A distinction must be made between wills governed by the Old Law and those governed by the New Law.

The Old Law requires that the legitim is reserved to the deceased’s descendants, and in their absence to the deceased’s ascendants, where a distinction is also to be made between legitimate and illegitimate children. The Old Law also regulated what portion of the non-disposable portion is to be allocated to the surviving spouse.

Following the changes brought about by the Act, the New Law no longer makes a distinction between legitimate and illegitimate children. Furthermore, under the New Law, the deceased’s ascendants are no longer entitled to any part of the non-disposable portion.

The Old Law and the New Law also bring about stark differences in the portions reserved by law to the persons above-mentioned.

Under the Old Law, illegitimate children may only inherit a portion of the deceased’s estate and shall not be eligible to inherit anything over and above this portion should they be in competition with any legitimate or adoptive children or other descendants, or children/descendants which may have been legitimated by subsequent marriage.

By ‘illegitimate children’, the law refers to children of the deceased who were born out of wedlock, including those that have been acknowledged, or legitimated by a court decree.

Under the Old Law, when illegitimate children are in competition with any other children or descendants, they would only be entitled to receive one-third (1/3) of the legitim which they would have been entitled to had they been legitimate. If there are no other children or descendants to compete with, the illegitimate children would be entitled to one-half (1/2) of the legitim which they would have been entitled to had they been legitimate.

By way of illustration, in the case of an illegitimate child competing with a legitimate child, the illegitimate child would be entitled to receive one-third (1/3) of the legitim which would have been due to him had he been legitimate; whereby if there were two (2) illegitimate children in competition with a legitimate child, each illegitimate child would be entitled to receive one-sixth (1/6) of the legitim which would have been due – as the one-third (1/3) would have to be divided by the number of illegitimate children present. Legitimate children of illegitimate children would also be able to claim the portion due to an illegitimate child that predeceases the deceased; however, illegitimate children of such would not be able to do so.

Under the Old Law, the legitim due to legitimate children, or to children legitimated by a subsequent marriage, or to adoptive children is one-third (1/3) of the deceased’s estate, if such children are not more than four (4) in number, or one-half (1/2) of the deceased’s estate, if such children are five (5) or more in number. When calculating the legitim due to legitimate children, one needs to add children who are incapable of receiving by will, as well as children who have been disinherited and also those who have renounced their share, to determine the total number of children present. However, in this case one does not add illegitimate children or children not born viable. Nevertheless, in instances where one seeks to determine the portion due to an illegitimate child, the aforementioned calculation needs to be carried out, with the only difference being that the number of illegitimate children present is also to be included in the total sum of children present when calculating the legitim which would have been due to the illegitimate child.

Under the New Law, there is no distinction between legitimate or illegitimate children. So, children, whether they are born in wedlock, adopted, or born out of wedlock are all equally entitled to the Reserved Portion. Under the New Law, the deceased’s children are entitled to receive a Reserved Portion of one-third (1/3) of the value of the deceased’s estate, if the children are not more than four (4) in number, or one-half (1/2) of the value of the deceased’s estate if such children are five (5) or more in number. The term ‘children’ shall also be deemed to include descendants of the deceased’s children in whatsoever degree they stand. However, descendants shall only be reckoned for the child from whom they descend. 

Under the Old Law, the legitim was, in certain cases, also due to the deceased’s ascendants. Ascendants were only entitled to the legitim where the testator did not leave behind any children or descendants (of any type) and is not survived by a spouse. In such cases, the legitim due to the ascendants is one-third (1/3) of the deceased’s estate. Distribution of this portion would be made depending on whether both or just one ascendent/s survived the deceased. If both ascendants survive the deceased, the one-third (1/3) portion would be divided equally between them. If only one (1) ascendant survives the deceased, the one-third (1/3) portion shall be due in its entirety to that ascendant. If neither of the ascendants survive the deceased, but other paternal and/or maternal ascendants in equal degree do, the legitim shall be due as to one-half (1/2) to the paternal ascendant/s and as to the other one-half (1/2) to the maternal ascendant/s. Lastly, if neither ascendant survives the deceased, but the deceased is survived by paternal and/or maternal ascendants which stand in different degrees, the legitim shall be due entirely to the ascendant in the nearest degree.

The New Law does not grant a Reserved Portion to the deceased’s ascendants, which essentially means that unless ascendants inherit through a will, they are not entitled to a Reserved Portion by Law.

Under the Old Law, the surviving spouse is entitled to a portion of the deceased’s estate referred to as the legitima portio. If the surviving spouse is in competition with any legitimate or adoptive children or other descendants, or children/descendants which may have been legitimated by subsequent marriage, the surviving spouse is only entitled to the usufruct of one-half (1/2) of the deceased’s estate, which portion shall be subject to the expenses of the last illness and to funeral expenses. Nevertheless, where the income from the property comprised in the portion of the community of acquests belonging to the surviving spouse, donations made and legacies bequeathed to the said surviving spouse by the deceased amount to one-half (1/2) or more of the usufruct over the deceased’s estate, the surviving spouse would not be entitled to such a right of usufruct, as previously mentioned. If the surviving spouse is not in competition with any legitimate or adoptive children or other descendants, or children/descendants which may have been legitimated by subsequent marriage, the surviving spouse is entitled to one-fourth (1/4) of the deceased’s estate in full ownership.

In both cases, the surviving spouse is entitled to the right of habitation over the tenement occupied as the principal residence of the surviving spouse at the time of death of the deceased, if the said tenement is solely held in full ownership or emphyteusis by the deceased, or jointly with the surviving spouse (“Matrimonial Home”). Without prejudice to the aforementioned, the portion due to the surviving spouse (and also to the deceased’s illegitimate children) shall not diminish the legitim due to the deceased’s legitimate descendants or ascendants. Moreover, this right of habitation ceases when the surviving spouse remarries.

Under the New Law, the Reserved Portion allocated to the surviving spouse is one-fourth (1/4) of the value of the deceased’s estate in full ownership if the deceased is not survived by any children or descendants. If the surviving spouse is in competition with any children or descendants of the deceased, the surviving spouse shall be entitled to one-third (1/3) of the value of the deceased’s estate in full ownership. In both cases, the surviving spouse shall be entitled to the right of habitation over the Matrimonial Home as well as to the right of use over any of the furniture in the Matrimonial Home belonging to the deceased. This right of habitation ceases when the surviving spouse remarries or enters into a public deed of cohabitation. The Matrimonial Home shall be excluded from the estate of the deceased over which the surviving spouse has a Reserved Portion. Furthermore, the right of habitation and right of use over the furniture shall subsist even if such have the effect of reducing, during the lifetime of the surviving spouse, the Reserved Portion due to any other entitled person.

Under both the Old Law and the New Law, one finds that the descendants of a person excluded as unworthy, or disinherited shall, in all cases, be entitled to the legitim or the Reserved Portion (depending on which rules shall regulate the testamentary disposition at hand), which would have been due to the person so excluded, so long as the person excluded would not be able to have a right of usufruct and administration (which is granted to parents by law) over the portion of the estate to be vested in favour of such descendants. Saving the aforementioned, the portions of the children or other descendants who are incapable, or who have been disinherited, or have renounced their share, shall devolve in favour of the other children or descendants taking the legitim.

All of the above is captured in the quick reference tables attached

Conclusion

From the above one can see that several factors come into play when determining to whom the non-disposable portion of a deceased’s estate shall be allocated and the extent of said portion.

With time, the provisions governed by the Old Law will be phased out, but currently, both regimes still have effect today and testators should be aware of which law will regulate their succession.