15 - 23 Hagley Road
The new EU Succession Regulations (“the Regulations”) came into operation in August 2015.
All the countries of the European Union signed up to the Regulations, with the exception of the UK, Ireland and Denmark. Although the UK did not sign up to the new Regulations (and notwithstanding Brexit), UK Nationals who own property in EU countries need to be aware of the Regulations and how they affect their estates.
The position before the Regulations
Every jurisdiction has its own rules on inheritance and succession. In England and Wales, we enjoy the freedom to leave our assets however we wish and this is commonly referred to as `testamentary freedom`. This is not the case in most jurisdictions around the world, where ‘forced heirship’ rules commonly apply. This means that in many European jurisdictions where clients commonly have second homes, such as France, Spain, Portugal and Italy, you cannot leave your entire estate to your spouse (or, say, partner), as the law of succession dictates that you must leave a share to your children. With different countries applying different rules, jurisdictions often came into conflict and it is not always easy to determine which rules should apply to a particular asset. English ‘Private International Law’ states that where a person domiciled in England and Wales dies with assets abroad, ‘moveable’ assets, such as investments and bank accounts will be subject to English succession rules, whereas ‘immoveable’ assets such as a house or land will pass on according the local rules.
The position following the Regulations
The Regulations were enacted to help prevent the conflict between different jurisdictions. Broadly speaking, the following rules apply: Where assets are located in a country which is a party to the Regulations, the Regulations provide that the law of the country in which the owner is ‘habitually resident’ will apply. However, under the new Regulations, if you are habitually resident in one country but you are a national of another, you can elect for the law of your nationality to apply to your estate instead. This means that, for people who live in England and Wales but have property in, say, France, the law of England and Wales will apply to their assets in Spain. However, if the same people were to retire to their Spanish property (and become habitually resident in Spain), if they wanted English law to continue to apply, they would need to make a choice of English law in their Wills.
This is important, as a failure to make an appropriate election in your Will, could lead to the laws of another country applying to your estate and how it is passed on. This could, for example, mean that `forced heirship` rules would inadvertently apply to your estate.
It is important that if you do have property overseas that you take legal advice to ensure that your Will is drafted correctly.
For further information and advice, please contact James Rousell on 01384 371622 or firstname.lastname@example.org