Who would you like to inherit your European holiday home?
A new European Union (EU) Regulation (650/2012 or Brussels IV) introduced on August 17th 2015 gives individuals across EU Member States the freedom to choose whether their assets are subject to local succession laws or those in their country of nationality.
In the UK, individuals are free to leave their estate to whomsoever they wish, whether that be to their family or charity, as long as this wish is clearly drawn up in a valid Will. However, most EU Member States follow the concept of ‘forced heirship’ where a share of an individual’s property and land must pass to certain immediate family members. For example, in France, which has well-known succession laws, a proportion of a deceased’s property must pass to children. A surviving spouse may be able to choose a life interest over the property but will never be entitled to an absolute interest of it all.
It is anticipated that the new Regulation will harmonise succession laws. This would mean that when an individual dies, the single national law of the country where the individual was a habitual resident at the time of death will apply to all their assets. This is effected by an individual making an election in their Will that their national law is to apply to their estate. However, the UK (along with Denmark and Ireland) has opted out of the new Regulation – so how does it apply to you?
If you are an English national with a property in France you can now revise your Will to include your French property with an election for English law to apply. This means avoiding the complicated ‘forced heirship’ rules and the inconvenience of having a separate French Will drawn up.
Although the new Regulation has been heralded as a major step forward in providing certainty in Will writing, there are some complexities that need to be considered. The most important of these is the use of Trusts which are commonly utilised for tax planning and protection purposes. However, difficulties may arise because many EU Member States do not recognise Trusts.
In light of the potential effect of the Regulation, we would encourage anyone who owns assets in an EU Member State to reconsider their Will and take further advice to avoid unnecessary difficulties on their death.
Leanne McGauley. Trainee solicitor.General, George Ide, News, Private Client