Have you made a Will in the UK and own property in another EU country? Then Brussels IV will affect the succession of your estate.
What is Brussels IV?
It’s the new EU Succession Regulation that will affect how your foreign assets are distributed. It affects anyone who dies on or after the 17th of August 2015.
Brussels IV allows you to choose the law you wish to apply to the succession of your whole estate. The EU member states, with the exception of the UK, Ireland and Denmark, are bound to Brussels IV, so must now apply your choice of law when handling the succession of your estate.
The current position in the UK
As the UK is not a signatory to Brussels IV, English law will continue to apply to the succession of your estate in the UK, whether or not you have chosen which law you wish to apply to your assets in another EU country.
Therefore Brussels IV is most relevant to the succession of a UK person’s estate outside the UK. Currently, if you own assets abroad, particularly land, those assets are governed by the succession rules in the country where your assets are held. For example, if you own a holiday home in Spain, the Spanish courts will apply their succession rules to that holiday home, but not necessarily to its contents or a local bank account.
What do I need to know?
Within the EU, you can now choose English law as the law you want to apply to your whole estate. This means that when another EU country has to deal with the succession of your property, they must apply English law. In due course they will no doubt develop new standard procedures for this, but don’t be surprised if they haven’t yet.
Following the earlier example, if you own a holiday home in Spain and have made a local Will with an election for English law to apply, the Spanish courts will have to apply English law to the distribution of that holiday home, and follow your wishes as prescribed in the Will.
However, if you haven’t made a Will or made a choice of law, then the Spanish courts would simply apply their own succession rules in deciding who the beneficiaries are and how the holiday home is to be divided amongst them.
By choosing English law you can avoid foreign forced heirship rules. This ensures your property goes to the beneficiaries you intend it to go to. In turn, this may affect the way in which local and UK death duties apply. For example, in some jurisdictions assets are taxed at different rates depending on who the beneficiaries are, and assets passing to a surviving spouse may not be exempt from tax in another country as they are in the UK. Special tax exemptions for agricultural or business property may also vary from country to country.
What I need to do?
If you own property abroad, you need to review your UK will, and a foreign will if you have one, for possible inclusion of a choice of law provision. You will need to specify that English law is to govern the succession of the whole of your estate. However great care will be needed to ensure that a new foreign Will does not inadvertently revoke an English Will.
In addition, the UK Inheritance Tax position will have to be checked as well as the affects of a new local will on death duties in the other country.
This is a highly complex topic and action should not be taken without careful advice related to your personal circumstances.