A new frontier in the boundary between professional and private life – solicitors’ undertakings
The EU Succession Regulation (EU 650/2012) (“the Regulation”), known as Brussels IV was introduced with the aim of unifying succession laws across EU member states. For individuals who hold assets in those EU member states who are signed up to the Regulation (“the Regulation Member States”), the default position is that the succession of those assets on death will be governed by the law of the country in which the individual died habitually resident. Alternatively, such an individual may choose, in their will, to apply the law of their nationality to the succession and administration of their estates. All EU member states have signed up to the Regulation with the exception of the UK, Ireland and Denmark. The Regulation will apply to deaths that occur on and after 17 August 2015.
In England and Wales, people can generally leave their estate to whoever they wish, though there are some notable exceptions to this rule, particularly with respect to those domiciled in England and Wales. However, in some EU countries such as Scotland and France, forced heirship rules apply which set out how an estate will be divided. For those individuals with assets in more than one country, various factors were considered by the courts in determining which succession law should apply. Different jurisdictions applied different connecting factors such as domicile, residence, nationality or habitual residence, in order to determine what laws should apply to an individual’s estate. Further, for some EU states the succession law to be applied depended upon whether the assets were moveable or immovable. The fact that the different jurisdictions applied different tests could often lead to a complex conflict of laws.
Where the Regulation applies, when an individual dies, the default position is that the law applicable to the succession of that individual’s estate, regardless of where the assets in their estate are situated, and whether moveable or immoveable, will be the law of the country where the individual was habitually resident at the time of their death. The intention is that only one succession law will apply. The default position can be overridden by an election in an individual’s will for the law of the individual’s nationality to apply instead. Multi-nationals can choose any of their nationalities.
Although the UK’s position is that it has not opted into the Regulation, it will still affect UK nationals who are resident in a Regulation Member State or have a connection to a Regulation Member State, for example a holiday home. Due to the way it is drafted, there is also some confusion as to whether the manner in which the UK has opted out of the Regulation is effective, or if it is after all included within the definition of “Member State”. Until this is resolved, there will be some uncertainty involved in estate planning for individuals with UK and EU connections.
We have set out below some examples of how the Regulation may operate. Whether it will be implemented and operate in practice in the expected manner in each jurisdiction has yet to be seen as it only came into force on 17 August 2015.
Individuals who believe that the Regulation may impact them should review any existing wills to ensure that no amendments are required, and keep in mind that any advice they received in the past may no longer be correct. For UK nationals (most closely connected to England) living in the UK with property in a Regulation Member State and who do not make a choice of law in their will but instead rely on the law of habitual residence to apply, the position as to whether English law will apply in these circumstances is much more uncertain. Therefore, such individuals may wish to consider making a “choice of laws” election in their will for English law to apply, particularly, for example, if they wish to avoid forced heirship rules.
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