EU Succession Regulation

euflagIf you have connections with more than one country, you need to know which country’s law will govern who inherits your estate when you die. This is important because the law of some countries provides that certain shares in your estate are reserved for close family members.

The EU Succession Regulation (EU 650/2012) (“the Regulation”) known as Brussels IV applies to all deaths on or after 17th August 2015. The aim of the Regulation was to unify succession laws across EU Member States.

The Member States which have signed up to the Regulation are: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. All EU Member States have signed up to the Regulation with the exceptions of the UK, Ireland and Denmark.

Prior to the Regulation coming into force, for those individuals with assets in more than one county, various factors were considered by the courts in determining which law should apply to the succession of those assets. Different jurisdictions applied different tests such as nationality, domicile and residence for example in order to determine what laws should apply to an individual’s estate. In some EU Member States, the law to be applied depended on whether the asset was moveable property such as money in the bank or shares, or heritable property such as land or buildings. This could often lead to conflict of laws where the different jurisdictions applied different connecting factors.

When an individual dies, if the Regulation applies, the default position is that the law applicable to the succession of that person’s estate is that of the country in which they were habitually resident, regardless of where the assets were situated and whether they were moveable or immoveable. The intention was that only one succession law will apply in any given case. An individual may choose to override the default position by electing in their Will for the law of their nationality to apply instead. Individuals who have more than one nationality can choose any of their nationalities to apply.

The default position can also be overridden if an individual was manifestly more closely connected with another country when they died, for example they had only just recently left that country.

Although the UK has not opted into the Regulation, it will still affect UK nationals who are resident in a Member State which has signed up to the Regulation or have assets in Member State which has signed up to the Regulation, such as a holiday home. The Regulation affects all assets in the Member States which have signed up to the Regulation, regardless of the place of death or citizenship of the deceased, even if they have no connection to those States or even to Europe.

As the UK has not currently opted into the Regulation, the position for UK nationals is unlikely to change following implementation of the Brexit vote, however this is not certain.

How might the Regulation affect you?

If for example an individual lives and is domiciled in Scotland and owns a holiday home in France, France will apply the Regulation. The holiday home in France will likely be governed by French law because Scottish law says that immoveable property located in France is governed by French law. However it is possible for that individual to make a Will in Scotland in which they choose Scottish law to apply to the Succession of their estate as a whole. In that case, France should apply the rules in the Regulation and Scottish Law should apply in relation to the succession of the whole estate, including the holiday home in France.

If someone who was born in Scotland moves to live in Cyprus and becomes domiciled there owning houses in both Scotland and Cyprus there could be a conflict between which law is to apply. Cyprus will apply the rules in the Regulation. This would mean that Cypriot law would apply to both the house in Scotland and the house in Cyprus. However Scottish law would apply Scottish law to the house in Scotland because it is immoveable property located in Scotland. This could lead to uncertainty and possible disputes. It would be possible to remove this uncertainty by including a choice of Scottish law in their Wills. Cyprus would then apply Scottish law to their estates as a whole, including both houses.

If you have connections with a Member State who has implemented the Regulation, the Regulation may not just affect who benefits from your estate when you die, it can also affect who administers your estate, how your estate is taxed and if certain family members are automatically entitled to shares in your estate.

If you believe that the Regulation may affect you, you should review any existing Wills to make sure that no amendments are required. You should be aware that any advice you received in the past may no longer be correct following the introduction of the Regulation. It is better to make a Will than to have a costly and time consuming cross-border legal dispute following your death.

If you own heritable property abroad it may still be beneficial to have a Will in that country dealing with the heritable property there as the Will should be drafted in accordance with local formalities and may make the transfer of that property easier. Both Wills should include the same choice of law.

For UK nationals living in the UK with property in a Member State who has signed up to the Regulation, it may be better to make a choice of law in your Will than to rely on the law of habitual residence being applied. You may therefore wish to consider making a “choice of law” election in your Will. Should you wish to discuss this or any other aspect of your Will or succession please contact Philip Dawson (Email: p.dawson@jgcollie.co.uk) or Vivienne Bruce (Email: v.bruce@jgcollie.co.uk).

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