|New EU Succession Laws Set to Impact UK Nationals in Europe|
The new rules are designed to ensure that nationals of any state, including non-EU states and EU states, can make a choice through their Will to apply their own national laws to the succession assets in other EU states.
In England and Wales, when it comes to individuals leaving property in their Wills, the concept of “freedom of testamentary disposition” or the ability to leave any property and assets on death to individuals, entities or organizations, in whatever proportion the deceased desires, is well known.
This is not, the case in the rest of Europe, where “forced heirship rules” exist. These rules, which differ in their application across EU states, impose succession principals, so that the deceased cannot control how property is passed down to spouses, children or other beneficiaries.
This all changes on the 17 of August 2015 when the European Succession Regulations, better known as Brussels IV, come into effect.
The new law will make it considerably simpler to settle international succession. It provides a single criterion for determining both the jurisdiction and the law applicable in cross border cases.
It will also provide a European Certificate of Succession, which will allow beneficiaries to prove that they are heirs or administrators, without further formalities throughout the EU as well as allowing personal representatives the authority to act across borders.
The applicable law will be the law of the country where the deceased had his or her habitual residence, unless:
Brussels IV will apply to all deaths after 17 August, and will be binding on all 27 EU member states, except for Denmark, the UK and Ireland.
The UK opted out for a number of reasons, including a lack of clarity around the definition of habitual residence, the role of personal representatives and concerns in relation to claw back on lifetime gifts. As a result, it is unlikely that the UK Government will, any time soon, if ever, opt into this.
It would be a mistake, however, to assume that as the UK has opted out that Brussels IV is not relevant. While for the vast majority of UK nationals there will be no particular need to have any regard for the changes that will apply, Brussels IV remains relevant for:
UK habitual residents with property in other EU states
For individuals habitually resident in the UK but with property in another EU state the relevant law of succession will be of their habitual residence i.e. English, Scottish etc. However, if an Englishman dies with property in France, but with the rest of his estate in England, the French property will pass in accordance with English law. However, under English law, the French property in accordance with the doctorine known as renvoi, will, at present, pass in accordance with French succession rules. Therefore forced heirship rules have not been avoided as one may have expected. The only way to ensure that these forced heirship rules are avoided, is to opt for, via his or her Will, English law to apply to his worldwide estate. There are, of course, many more regulations that will apply in different EU states and individuals with assets in more than one country will always need to obtain advice. Furthermore, there are also a number of exceptions that will apply. One such principle is that of ‘public policy’ in accordance with which it is always possible to set aside a provision of a separate applicable law, if it is incompatible with a public policy of a relevant state.
UK expatriates resident in other EU states
For UK expatriates habitually resident in other EU states, in absence of any election, the local laws will apply to the succession of their estate in the event of their death. This is, of course, very significant given that these countries impose local forced heirship rules. English nationals, who would prefer English laws to apply to succession on their death, should elect in their Will for English law to apply. It should be noted that while this is the theory it does assume that local notaries will be aware of the new rules, which sadly will not always be the case.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Aug.18, 2015