Succession rules governing the devolution of an individual’s estate where that individual owns property in more than one country can be very complex. The rules may become even more complicated where the individual in question has multiple nationalities and/or lives in a further, different, jurisdiction at the time of their death.
The complexity of the succession rules in these circumstances is caused by the private international laws (PIL) in play in the various jurisdictions where the individual owns property and with which that individual is connected. These laws can differ quite substantially. For example, in England, our PIL for succession matters looks both to the law of where an individual is domiciled, meaning the place they consider to be their true home, and to the law of where the assets are located. The distribution of moveable property on death (such as money held in bank accounts, personal effects etc) is determined by the law of the owner's domicile but for immoveable property (namely, real estate) it is determined by the law of the location of the property. However, in some countries, it is the law of the nationality of the individual that applies while in others it is the law of the jurisdiction where the individual is resident.
The European Commission sought to simplify matters in this circumstance by harmonising the rules regarding succession within the EU through EU Regulation No 650/2012. This regulation is commonly known as ‘Brussels IV’. As reported in our private client update in October 2013, Brussels IV came into force on 17 August 2012 but it was not until 17 August this year that the provisions of Brussels IV came into effect.
The UK (as well as Ireland and Denmark) has not signed up to Brussels IV but the rest of the EU has (each being a ‘Brussels IV member state’). However, Brussels IV will still be relevant for UK nationals and individuals living in the UK where the individual in question:
- owns property in a Brussels IV member state;
- is a national of a Brussels IV member state; or
- is resident in a Brussels IV member state.
If any of the above applies, the testamentary arrangements of the affected individual should be reviewed as a matter of urgency to ensure that those arrangements:
- when put in place prior to Brussels IV coming into effect will not now give rise to unintended results; and
- make the most of Brussels IV (for example, it may be possible for an affected individual now to have only one will governing the devolution of their worldwide estate, as opposed to multiple wills, thereby achieving the simplification intended by the European Commission).
It is, however, important to note that as this is new legislation and of wide application there is still uncertainty about some of the provisions of Brussels IV, not least the classification of the UK (and other non-signatories) as ‘third party states’ as opposed to Brussels IV member states, which will likely only be resolved with case law in the years to come.