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The Reserved Portion: A Nuisance or a Nightmare?

by Dr Laura Calleja – Junior Associate

It was a bitter day for Craig and Meegan Panzirer, granchildren of the wealthy estate mogul Ms. Leona Helmsey, when they found out that their grandmother, whilst choosing to disinherit them both, nominated her beloved canine companion ‘Trouble’ as the beneficiary of a twelve million dollar trust. Angered by their grandmother’s decision, they initiated court proceedings to have her will annulled. After careful consideration, the Manhatten Surrogate Court came to the conclusion that Ms Helmsey had been mentally unfit when she executed her will and thus a cause for the reduction of the trust existed. As a result, Trouble ended up being a beneficiary of a mere two million dollar trust fund, whilst both Craig and Meegan Panzirer ended up with three million dollars each. The remainder was in turn left to the Helmsey Charitable Trust. (1)

The peculiar case of Leona Helmsey’s will dominated the media for quite some time, with many describing her choice of bequest as unusual and down right ridiculous. Her American domicile however afforded her the possibility of disposing of her estate as she pleased, even if her bequests challenged social norms. Although her will was eventually altered to provide for the disinherited grandchildren, the Court agreed to do so not on account of the ‘moral obligation’ that Ms Helmsey presumably had as a grandmother to her grandchildren, but rather on account of her mental faculty when drafting the will. In doing so, the Court avoided challenging the freedom of the testatrix to freely bequeath.

This however, would not have been the case had Ms Helmsey been a Maltese person. How come? Article 615 of Chapter 16 of the Laws of Malta (2), which establishes the infamous reserved portion, precludes each and every person who has descendants and/or a surviving spouse from freely disposing of their estate once they are deceased. Indeed, it precludes every testator and testatrix from encumbering the reserved portion with any burden and or condition in an effort to ensure that each of their descendant and/or surviving spouse is provided for once said testator or testatrix passes away.

Despite its current cumbersome and restrictive nature, it is interesting to note that prior to the 2004 amendments to the Maltese Law of Succession, the reserved portion, previously known as the legitim, was even more restrictive. Additionally, whereas prior to 2004 a descendant claiming the legitim could potentially be given his share of the deceased’s estate in kind, after the 2004 amendments to the law the reserved portion was limited to a right of credit. In fact, today, those descendants and/or surviving spouse demanding the reserved portion are only entitled to receiving their share of the decuius’ estate in cash.

However, what share of the decuius’ estate are descendants and/or the surviving spouse entitled to? Article 616 of Chapter 16 of the Laws of Malta provides that in those cases where the decuius’ had four children or less his or her descendants are entitled to one-third of the value of his or her estate. On the other hand, where the decuius’ had five children or more his or her descendants are entitled to one-half of the value of his or her estate. The surviving spouse is entitled to one-third of the decuius’ estate in full ownership if there are no children (3) or to one-fourth of the value of the decuius’ estate in full ownership should there be children (4). Interestingly enough, the surviving spouse is also entitled to continue living in the matrimonial home until and unless he or she contracts another marriage (5). It is important to note that these reserved portion shares are worked out on the value of the estate of the decuius’ after all debts and funeral costs have been deducted (6).

Why is the reserved portion seen as restrictive?

The reserved portion can be seen as being at odds with a person’s freedom to dispose of his or her property during his or her life. Whereas whilst living and breathing a person is free to choose what to do with his or her property (even deciding to give it away for free if he or she wishes), the same cannot be said when it comes to testamentary dispositions. This is because the reserved portion acts as a restraint to one’s freedom to dispose causa mortis. Similarly, it also restricts the heirs’ right to receive by testamentary disposition as it enforces on them the obligation to pay the descendants and/or the surviving spouse their share of the value of the estate by way of the reserved portion.

Ultimately, whichever way one looks at the reserved portion, it cannot be denied that it acts as a restrictive measure on a person’s freedom to dispose of his own property – a freedom that in all other cases is not only guaranteed but also seen as a fundamental human right that must be protected above all else.

Given however, that the testator or testatrix will be deceased once the reserved portion comes into play it is fair to say that whilst for said testatrix/testator the reserved portion is merely a nuisance, for the heir/s receiving his or her share as per the deceased’s will, it can end up being quite the testamentary nightmare!

(1) Last Will and Testament of Leona M. Helmsley, Article 1(G) under ‘Bequests’ : ‘I have not made any provisions in this Will for my grandson CRAIG PANZIRER or my granddaughter MEEGAN PANZIRER for reasons which are known to them.’ – obtained from < http://uniset.ca/misc/helmsley_will.html > last accessed 8 February 2019)
(2) The reserved portion is the right on the estate of the deceased reserved by law in favour of the descendants and the surviving spouse of the deceased.
The said right is a credit of the value of the reserved portion against the estate of the deceased. Interest at the rate established in article 1139 shall accrue to such credit from the date of the opening of succession if the reserved portion is claimed within two years from such date, or from the date of service of a judicial act if the claim is made after the expiration of the said period of two years:
Provided that the Court may, if the circumstances of the case so require, decide not to award any interest or establish a rate of interest which is lower than that stipulated in article 1139.
(3) Article 632 of Chapter 16 of the Laws of Malta
(4) Article 631 of Chapter 16 of the Laws of Malta
(5) Article 633 of Chapter 16 of the Laws of Malta
(6) Article 620 (2) of Chapter 16 of the Laws of Malta

Disclaimer: This article is not to be considered as legal advice, and is not to be acted on as such. Should you require further information or legal assistance, please do not hesitate to contact Dr Laura Calleja on laura@abalegal.eu.