Anyone who has been involved in cross-border inheritance or estate planning will be aware that it is a complex process especially when someone owns property in more than one country. This is because the various assets in the same estate can be subject to the laws of different countries.
However new regulations are due to come into force on 17th August 2015 which are intended to harmonise the differing, and sometimes conflicting, laws of the EU countries in relation to the succession of assets.
The intended effect of the new European Succession Regulations (Regulations) is to make things less complicated so that instead of different laws of different countries applying to different assets, just one country’s laws will govern the succession of all the assets in the deceased’s estate.
So which country’s laws will be applied?
The default position is that the law of the country in which the deceased has their habitual residence at the time of death will apply and will govern the succession of the whole worldwide estate.
People will, however, be able to opt for the laws of the country of their nationality (or one of their nationalities if multiple) to apply to their estate instead by properly setting this out in their will.
The Regulations also state that the law chosen does not need to be the law of another EU Member State. This would therefore enable, for example, an Australian national who is habitually resident in Spain to choose Australian law to apply to his estate.
It is important to note however that these regulations deal with the laws of succession only i.e. who inherits the assets of the estate. It does not deal with any tax matters, including inheritance tax. National law will continue to determine how inheritance tax is calculated and whether it is the estate or the beneficiary who is liable for the payment of the tax.
All EU countries will apply these regulations with the exception of the UK, Ireland and Denmark who have opted out. Although the UK is therefore not a signatory to these regulations, the regulations are still of considerable relevance to UK residents and nationals with assets in participating EU countries.
After 17 August 2015, an English national (for example) will be able to create a Will that stipulates that English law is to apply to his/her entire worldwide estate, including property in other participating EU member states. As such, any EU member state which is a signatory to the regulation would be required not to apply its own succession rules to those assets, and apply English succession law instead.
Often we get asked if it will therefore still be necessary to make a separate will covering the assets of each country. Our advice is always to seek the advice of a properly qualified lawyer to advise you, as the position may be different depending on each individual’s circumstances. There may also be additional benefits to having more than one will when it comes to the practicality of administering your estate.
The Regulations also provide for the issue of a European Certificates of Succession. This is a document similar to a Grant of Probate and provides proof of who is entitled to the assets of the estate. The ECS will be issued by the authorities of the participating Member State in which the deceased was habitually resident and will be recognised by all of the participating Member States.
For example, the beneficiaries of a Spanish National, who dies habitually resident in France, with assets in France, Italy and Spain will be able to deal with all the assets on the basis of the one Certificate which will be recognised not only in the country issuing it (France) but also (in this example) Italy and Spain.
However because the UK has not opted in to the Regulations it is not bound by them or subject to their application. Therefore where a UK national who is habitually resident in France has chosen UK law to apply to his estate it may still be necessary to obtain a UK grant of probate to administer any UK assets.
If you require any advice in relation to these new Regulations and how they may affect you or if you need assistance with making a Will contact Worldwide Lawyers who can put you in touch with a lawyer to advise you.