Brussels IV – New EU Succession Law
(REGULATION 650/2012 OR THE BRUSSELS IV)
If you don’t have assets in the EU States outside the UK, the new Regulation will be of little interest to you but you may know people who own properties in EU countries who might benefit from reading this so please pass it on.
For British citizens who do have assets in the EU States, there are changes due which should enable them to know in advance which law will apply to their succession. This is the objective of Reg.650/2012.
English common law means English people can leave their assets to whomsoever they wish, (subject to the Inheritance Family Provisions legislation). This is known as testamentary freedom.
In continental Europe a big part of an estate (often around half) is reserved for the surviving children of the deceased and must be equally divided between them. This “forced heirship” makes it impossible to disinherit financially irresponsible children; it also makes it hard to reward the deserving by, say, leaving more to a daughter who gave up a career to care for her ailing parents.
Also “clawback” laws in many countries stop parents from dodging forced heirship by giving assets away in their lifetime. This applies to gifts made in the last years of life (two years in Austria, ten in Germany), or much longer: in some countries, no time limit applies.
If you are resident in England with real estate in France, for example, the laws of forced heirship will apply to that part of your estate in France.
From August 17th 2015, when the new regulation comes into operation, the succession rules imposed by forced heirship will change. Any British national who has property in one of the participating States can choose the country of their habitual residence or the country of their nationality as the law to govern who gets what when they die.
In other words, they can put a provision in their wills stating that they wish English law to be the applicable law for their assets situated in an EU State.
Tom can put a provision in his English will even if he lives in Spain and not in England that covers both English assets and his Spanish assets. This is known as a nomination and People with property in an EU state should consider a new will to take advantage of Regulation 650/2012 and make the appropriate nomination.
The new regulation applies to all citizens wherever they hail from, so Bruce, an Australian national, with property in France can make a nomination for Australian Law to apply to his property in France.
And although the UK has opted out of the Regulation [as have Ireland and Denmark] British nationals can make an election under the laws of those participating States.
For example, Donald, an Englishman, retired to live in Spain. He has a house, bank account and furniture in Spain and a house in England which he rents out for income. He states that he wishes succession of his assets to be governed by some part of Britain, for example English law, as opposed to the law where he is resident.
(Note: Local tax laws will apply to assets in the E.U. and English tax laws will apply on death in the usual way).
The deceased may choose the law of his nationality to apply to succession of all of his assets across the Brussels IV zone. In other words, there is now an opportunity for people with property in a Regulation State to elect in their Wills that the law of their nationality should apply to the succession of their relevant EU property.
The selection of the law of nationality must be made expressly in a will. The application of these clear rules to the estates of individuals dying after 17 August 2015 should simplify matters.
For English nationals with foreign assets, it would be advisable in most cases for them to make an election that succession to their assets situated in the Brussels IV zone should be via English law.