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Bulgarian Inheritance Laws

With so many foreigners owning property in Bulgaria, GPNG Law Firm visits the question of inheritance legislation. This article summarises the main provisions that one needs to have in mind when applying them to some common case studies.

Case Study 1 - Owning through a company

Scenario: There is a married couple and for both spouses it is a second marriage. They both have children from their previous marriages. The couple has purchased a house with land in Bulgaria, through their Bulgarian limited company. The husband passes away. Who inherits the property?

The confusion in this case come from the fact that they own property (considered immovable property and therefore subject to Bulgarian inheritance laws, which have ‘reserved heirs' who cannot be disinherited), yet the property is owned by a company in which they have shares (shares are considered movable property and are not subject to some of the same inheritance restrictions).
The solution to this confusion is simple. The house and the land do not belong to any individual but to a legal entity, the Bulgarian company.
Therefore the death of any of the shareholders does not affect the assets of the company directly - they will continue to belong to the company. The only property the shareholders really own are the shares in the company. If any of the shareholders is deceased, a certain chain of consequences is triggered only in respect to the succession to the shares in the company. Regardless of who replaces the deceased shareholder in the company, the ownership of the house and land will remain unaffected - the company owns it.
Where are you resident at the time of death?
The important fact is that the shares are movable property, which means that not Bulgarian law, but the law of the "last usual residence" of the deceased is applicable to the law of succession.
If the married couple had invested in Bulgaria, but kept their habitual residence in the United Kingdom, the case is clear - UK law will apply, which gives much more freedom to dispose of your property as you wish by way of a will.
In the case where the married couple had moved their residence to Bulgaria and had obtained residency certificates, the answer could be more complicated. The Bulgarian Private International Law Code does not contain a definition of the term "last usual residence" and given the fact that the new residency certificates do not point to any Bulgarian address, it will be hard to determine which is the "last usual residence" of the deceased. In our opinion, the fact that the deceased had obtained a residency certificate in Bulgaria may not by itself be treated as ultimate evidence in this respect. It is more likely that the residency certificate represents a refutable presumption for the last habitual residence. Moreover, in most cases EU citizens living in Bulgaria do not pay social security contributions, which would otherwise serve as a proof of the last usual residence. Provided that the disposal of the property by way of a will may be objected only through litigation, initiated by the interested person, claiming that his "reserved portion" had been harmed, it will be a safer bet in both cases to consider your national law as applicable in respect of succession to shares

Case Study 2 - owning as individuals

Scenario: There is a married couple and for both spouses it is a second marriage. They both have two children from their previous marriages. The couple has purchased an apartment in their joint names personally. The husband passes away. Who will inherit the property?

Before answering this question, let us remind you of the mandatory legal rule of the Bulgarian Family Code, which derogates all choice of law rules that contradict it: all assets that have been acquired during marriage are considered matrimonial property - regardless of whether it is acquired in the name of only one or of both spouses. This presumption can only be refuted through litigation, by proving the exclusive contribution of the spouse claimant.

There is no question in this case, that the law of the location of the property (lex loci) will apply - Bulgarian law. According to Bulgarian law, if the deceased had not prepared a will, then his two children from his previous marriage and his current surviving spouse would succeed to equal shares. In other words, one third of his half of the apartment each.
If the apartment had been owned solely by the deceased husband, then the surviving wife would receive a total of 66.66% of the apartment (made up of her 50% inheritance, plus one third of the husband's 50%). The children of the deceased would get 16.66 shares of the apartment each. Please bear in mind, that even if any of the children of the deceased had died before their succession, their own descending heirs would keep the succession rights to the apartment.

According to the Bulgarian Succession Act, the successor may dispose of its entire property through a will. However, if the deceased husband in our case left a will, it would be perfectly valid to the extent in which it does not harm the "reserved portion" of the heirs. With two children and a wife, the true disposable portion of the husband's property would represent only one fourth of the whole patrimony. In the situation that the husband's will harms the reserved portions, the wife and the children will be entitled to file a claim for restoration of the reserved portions.

GPNG Law Firm, Sofia, Bulgaria. http://www.gpng-law.org

Important Note: The cases given above are only an example of the distribution of inheritance and are not applicable to all situations. In Bulgarian law the size of the proportions, both reserved and disposable, and both in the case of inheritance by law or inheritance by will, vary depending on the number and type of heirs (children, spouse, parents, brothers and sisters) Quest Bulgaria recommends strongly you consult with a professional law firm when you think Bulgarian law may apply to you.