18 September 2015 by

The New EU Inheritance Rules

If you own property or other assets in different countries, you should be aware of the new EU regulations covering cross-border successions – otherwise known as ‘Brussels IV’.

Prior to the introduction of Brussels IV, on the 17th August 2015, people dealing with cross-border estates could find the administration and distribution of those estates being governed differently in different EU countries. For example, some European countries apply ‘forced heirship’ rules. These mean that, unlike in England and Wales where you can leave your estate to anyone, in those jurisdictions it is not possible to disinherit certain relatives.

The main purpose of Brussels IV is to allow individuals to choose the law which applies to the succession of their estate. Individuals can opt either for the law of the country of their nationality or the law of the country of their last residence. Alternatively, the default position (i.e. if you do not expressly state your wish) is that the succession of your estate will be governed either by the law of the country in which you have your main residence at the date of your death or the law of the country with which you are most closely associated. In many instances, however, this may be arguable. So, to avoid any uncertainty, you should determine which laws apply by making the appropriate declaration in your Will (or codicil).

Denmark, Ireland and the UK have all opted out of Brussels IV, so they can all still apply their own rules, but Brussels IV will still affect you if you have assets in any other EU country.

In brief, under the laws of England and Wales, succession to an individual’s immovable property (i.e. land and buildings) is governed by the laws of the country in which the property is located. Succession to a person’s movable property (i.e. all other belongings) is regulated by the laws of the country of the person’s domicile when they die, although domicile can be difficult to establish. Also, even though Brussels IV does not alter the tax laws in any country, but the amount of UK inheritance tax (and similar taxes abroad) that is payable will often depend on who inherits your estate.

Brussels IV marks a considerable development in EU succession rules which should result in faster, easier and cheaper procedures. Some of the most important advantages are:

  • Being able to choose the law which will govern your estate reduces the uncertainty when you have connections with more than one country.
  • The ability to opt out of ‘forced heirship’ rules; for example, before Brussels IV, a man in the UK with a property in France would have been obliged to leave it to his wife and children due to French ‘forced heirship’ rules. Under Brussels IV, he can choose the law which applies to the succession of the property – so, if he wants, he can leave it to someone else in his Will.
  • A European Certificate of Succession (ECS) has been created in order to allow heirs, legatees, executors and estate administrators to prove their status and exercise their rights/powers in other EU member states.

Some additional points to consider are:

  • Some EU countries, such as France, do not recognise the role of executors; this means that, if an ECS has not been issued, your executors may not be able to exercise their powers.
  • If you decide that English law should apply, e.g. to avoid ‘forced heirship’ rules, you should be aware that any claims that could be brought against your estate in the UK could also then be brought against your foreign assets as well.
  • If you are primarily based in England, but you do not want English law to apply to the succession of your estate, then you will need to make this clear within your Will.
  • Choosing to apply the law of your nationality will ensure that the succession of your estate is governed by the laws with which you are most familiar.
  • It is unclear, at present, whether a Will you have already made can be treated as making a choice of law, so a statement covering your choice of law should be included in your Will.
  • You do not have to be an EU national for Brussels IV to apply. For instance, if you are a US national living in Spain, you can still choose US law to govern the succession of your estate.

Review your Will

It is highly recommended that you review your Will as the advice you have been given previously may no longer apply. Also, be aware that not expressly stating in your Will the law which should govern the succession of your estate does not mean that you are not making a choice of law.

For further advice on these issues, please contact Michael Culver on 0207 288 4741 or at michaelculver@boltburdon.co.uk.

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