Many EU countries have ‘forced heirship’ provisions, which mean that their own legal system dictates who succeeds to a deceased’s assets. For instance, when a French National dies leaving a spouse and children, his property is simply divided between them.
What has this to do with us in the UK when we have written a will? The fact is that our cross-border succession laws state that immoveable property, such as land, is governed by the law of the country in which it is located. So, if you have a property in France, the forced heirship rules will apply to the devolution of that asset on your death. Spain, Portugal Italy and some other European countries also have forced heirship rules. Not only might this not be what you want in terms of succession, but also it can play havoc with inheritance tax planning where our tax laws in England and Wales will apply.
The new rules
On 17th August 2015, the position changed and you may need to be pro-active to take advantage of the new rules.
For many years, those dealing with a deceased’s assets in different countries have had the costly and time consuming business of establishing which of those countries’ differing succession laws apply to that estate. Thanks to new EU legislation entitled “EU Regulation 650-2012’, also known as ‘Brussels IV’, the succession law that applies to any one estate is now unified.
For states that have implemented Brussels IV, the default position is that the law of the country in which the deceased was ‘habitually resident’ will apply to his or her succession. However, an individual can elect for the law of his nationality to apply. The expectation is that this will allow an individual to carry out succession and tax planning with some confidence.
How will this affect those residents and nationals in the UK or those who have chosen to live abroad?
The fact that the UK, Ireland and Denmark have opted out of the new rules does not mean that our hands are tied. Fortunately Brussels IV affects all assets in states which have implemented, it regardless of where the individual dies or his nationality.
What should I do next?
If you have assets on the continent, other than in Denmark and Ireland, you can make an election under the laws of the participating EU states for ‘UK’ law to apply. This will be a great relief to many who want to avoid the forced heirship provisions.
Cross-border estates remain complex. You should make sure that you seek advice from an experienced solicitor who can consider your worldwide assets in conjunction with your will and your domicile and residence; and advise whether an election in your will to apply a different succession law is appropriate.
For further information, please contact Lucy Gordon, Private Capital Partner at Spratt Endicott Solicitors on 01295 204000 or by email at email@example.com.
*Disclaimer: While everything has been done to ensure the accuracy of the contents of this article, it is a general guide only. It is not comprehensive and does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation.*