Relocating to Italy? An American's Guide to the Four Pillars of Italian Estate Planning

Giuseppe Calisi
4 days ago
8 min read

Moving to Italy is the dream of a lifetime. From the dolce vita to the incredible food, culture, and history, it's an unparalleled adventure. But for an American family planning a permanent or long-term move, that adventure may come with a critical "to-do" list. Right at the top, alongside your permesso di soggiorno and finding the right school, should be understanding Italy's estate planning system.

Why? Because Italy operates on a civil law system, which is fundamentally different from the common law system you're used to in the United States. When it comes to your assets, your family, and your legacy, "what you don't know" can have significant and costly consequences.

Navigating this new system can be complex, but it's built on a few core concepts. Here are the four fundamental pillars every American family must understand.

Pillar 1: "Il Patrimonio" — Understanding Your Net Worth, Italian Style

In the U.S., "net worth" is a financial snapshot. In Italy, il patrimonio is a foundational legal concept. It represents the entirety of your assets (both movable and immovable) and your liabilities. The Italian legal system views this differently depending on its context.

Family Net Worth and Italian Succession Law The Italian legal system often considers a family's overall net worth, or patrimonio (nucleo familiare), as a single, holistic entity for succession and tax purposes. This comprehensive view can encompass not only Italian assets—such as real estate, bank accounts, investments, art, and personal belongings—but also worldwide assets, including those held in the U.S. For individuals who become residents of Italy, the country's law can take these worldwide assets into account for succession and taxation. However, the specific rules and application are highly dependent on the individual's unique circumstances and the relevant applicable regulations.
Business Net Worth: If you are an entrepreneur, the distinction becomes important. The patrimonio of your business (e.g., an S.r.l., or limited liability company) is generally legally distinct from your personal patrimonio. This creates a liability shield, similar to an LLC in the U.S., helping to protect your family's personal assets from business creditors. Planning for the succession of a business may require a special tool, the patti di famiglia, which we'll see in the next pillar.

Pillar 2: Planning Your Legacy — Instruments for Transferring Wealth

The Italian system provides several tools for planning the transfer of your patrimonio. Some are used to transfer assets inter vivos (while you are alive), while others plan for the transfer of assets mortis causa (after death).

Successione Mortis Causa (After-Death Succession): This is the default process. When a person dies, their patrimonio may pass to their heirs either according to a will or, if there is no will, by the rules of "intestate succession" (see Pillar 3). The specific outcomes depend on the individual’s circumstances and applicable law.
Donazione Diretta e Indiretta (Direct & Indirect Gifts): These are the two most common ways to transfer assets while alive.
1. Direct: A formal gift, such as deeding a house to a child or a large bank transfer. This typically requires a formal act before a Notaio (notary).
2. Indirect: A more subtle gift, such as paying for a child's apartment or forgiving a large debt. Italian tax authorities mayview these as taxable gifts.
Patti di Famiglia (Family Pact): A useful tool for business owners. Governed by Article 768-bis of the Civil Code, this allows an entrepreneur to transfer the family business (or shares in it) to one or more descendants while alive. The recipients must, in turn, compensate the other potential "forced heirs" (see Pillar 3) who are not receiving interests in the business. This is a limited exception to Italy's broader restrictions on inheritance agreements.
Trust (Il Trust): As Americans, you are very familiar with trusts. Italy, as a civil law country, does not have trusts as a native legal instrument. However, thanks to The Hague Convention, Italy recognizes trusts created under foreign law (like a U.S. trust). This can be used as a tool for asset protection and complex family planning, but it requires expert, cross-border legal structuring.
Polizza Vita con Beneficiario (Life Insurance Policy): This is often considered a compelling tool in Italy. The proceeds of a life insurance policy paid to a designated beneficiary are considered to be outside the deceased's patrimonio. This means they are usually not subject to the forced heirship rules (Pillar 3) and, in most cases, are exempt from inheritance tax.
Testamento (Will): This is the central planning tool, which we will cover in detail in Pillar 4.

Pillar 3: The Family Tree and "Forced Heirship"

In the U.S. (outside Louisiana), you have "testamentary freedom"—you can leave your assets to whomever you wish (your children, your friend, a charity).

Italy does not have this. Instead, it has "Forced Heirship."

The Italian Civil Code defines two types of heirs:

Eredi Legittimi (Intestate Heirs): These are the relatives who inherit your assets if you die without a will. The law (starting from Art. 565 C.C.) dictates a strict "waterfall" based on your grado di parentela (degree of kinship)—spouse, children, parents, siblings, etc.
Eredi Legittimari (Forced Heirs): These are specific, close family members who are legally entitled to a fixed portion of your estate, known as the quota di legittima or "reserved share." These heirs are your spouse, your children, and (if you have no children) your parents.

This is what a family tree would look like for a family all the way to the 6th degree of kinship.

Italian family tree forced heirship structure

The determination of reserved shares, and consequently available shares (calculated as 1 minus reserved shares), hinges on the degree of kinship. This calculation would vary depending on whether the deceased (de cuius) is survived by a spouse or not.

You cannot disinherit them. Even if you write a will leaving 100% of your assets to, for example, a charity, your eredi legittimari can sue the estate and "claw back" their legally reserved portion.

The "American Escape Hatch" for Forced Heirship

While this situation might initially cause concern, a robust solution exists for non-Italian citizens. This is the EU Succession Regulation (No 650/2012), commonly referred to as "Brussels IV," which offers a transformative option.

This regulation allows an individual to elect the law of their nationality to govern their succession.

This means a U.S. citizen living in Italy can include a professio juris (profession of law) clause in their will, formally declaring that they want the law of their U.S. state of nationality (e.g., "the laws of the State of New York") to govern their entire estate. When properly executed, this may allow the individual to avoid the application of Italian forced heirship rules and restore the testamentary freedom you are accustomed to, allowing you to distribute your assets as you see fit.

Pillar 4: Making It Official — The Types of Wills in Italy

To make that all-important election of U.S. law, you need a valid Italian will. Italy recognizes three primary forms:

Testamento Olografo (Holographic Will - Art. 602 C.C.):

How it works: This is the "DIY" will. To be valid, it must be entirely handwritten by you (no computer, no typewriter), dated, and signed by you.

Pros: It's free, completely private, and simple.

Cons: It can be easily lost, destroyed, or challenged (e.g., claims of forgery or incapacity). It is also easy to make a legal error (like forgetting the date) that invalidates it.

Testamento Pubblico (Public Will - Art. 603 C.C.):

How it works: You go to a Notaio and, in the presence of two witnesses, you state your wishes. The Notaio transcribes your wishes into a formal legal document, reads it aloud, and you, the witnesses, and the Notaio all sign it.

Pros: It is legally ironclad. The Notaio ensures all legal requirements are met (including a professio juris clause). It is registered in a central registry and cannot be "lost."

Cons: It costs money (for the notary's services) and is not private (the notary and witnesses will know its contents).

Testamento Segreto (Secret Will - Art. 604 C.C.):

How it works: A hybrid model. You write (or type) the will yourself and seal it in an envelope. You then bring it to a Notaio, who, in front of witnesses, drafts a formal "deed of receipt" that is attached to the envelope. The Notaio does not know the contents.

Pros: It combines the privacy of the holographic will with the official registration and security of the public will.

Cons: It is less common and still has a formal process.

For an American expatriate, the Testamento Pubblico is almost always the recommended path. The cost is a small price to pay to ensure your election of U.S. law is drafted correctly and your will is legally unassailable.

A Practical Example: The High Cost of "No Will" in Italy

Let's tie all these pillars together with a real-world scenario.

The Scenario: A young American couple (let's call them John and Jane) move to Italy. They have no children. John's parents and his two brothers all live in the United States.

The Balance Sheet (Pillar 1): John and Jane's joint net worth in Italy is as follows. We assume they own everything in a 50/50 joint capacity.

Assets:

Italian Apartment: €300,000

Investment Portfolio (Bonds): €100,000

Joint Bank Account: €40,000

Total Assets: €440,000

Liabilities:

Mortgage Balance: €120,000

Total Liabilities: €120,000

Total Joint Net Worth: €320,000

John's Estate (His 50% Share): €160,000

The Event: John tragically passes away without a will (known as dying "intestate"). Jane assumes she will inherit his 50% share, giving her the full €320,000. She is wrong.

The Outcome (Pillar 3): Because John died intestate, Italy's "Intestate Heirs" rules apply (Art. 582 of the Civil Code). The law dictates who inherits his €160,000 estate. The heirs (eredi legittimi) in this case are his wife, his parents, and his siblings.

The distribution is not 100% to the wife. Based on this specific family tree (spouse, ascendants, and siblings), the law splits the estate as follows:

To Jane (Spouse): 2/3 of the estate = €106,667 (approx.)

To John's Family: 1/3 of the estate = €53,333 (approx.)

This 1/3 share is then further divided by law (Art. 571 C.C.), which guarantees the parents (ascendants) a minimum portion.

To John's Parents (in the U.S.): 1/4 of the total estate = €40,000

To John's 2 Brothers (in the U.S.): The remaining 1/12 of the total estate = €13,333

The Shock: Jane now legally owes €53,333 to her in-laws. This is not her "family money" anymore. She must find a way to pay them, which might mean selling the investment portfolio or even the apartment she lives in.

How to Fix This (Pillars 3 & 4): This entire nightmare scenario is avoidable.

If John had a Will...: What if John had a will leaving 100% to Jane? His parents (as eredi legittimari, or forced heirs) would still be legally entitled to their 1/4 reserved share (€40,000). His brothers would get nothing (as they are not forced heirs), but Jane would still owe €40,000 to her in-laws.
The Correct Solution: John should have gone to a Notaio and created a Testamento Pubblico (Public Will). In that will, he would make the "American Escape Hatch" election (Pillar 3), stating his estate should be governed by the laws of his U.S. home state. This U.S. law allows him to leave 100% to his wife. This simple declaration, embedded in a valid will, would have protected Jane completely and nullified the forced heirship claims of his parents.

Conclusion: Don't Do It Alone

This is a brief overview of a deeply complex legal field. The most important takeaway is that Italian law is not "better" or "worse" than U.S. law—it is simply different.

As an American family, your estate plan must be a "hybrid" that is valid in both countries and addresses complex cross-border tax implications. This is not a DIY project. Seek out qualified, bilingual legal and financial professionals who specialize in both U.S. and Italian law to guide you.

Benvenuti in Italia!

DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.