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Will the EU Succession Regulations (Brussels IV) Affect Your Estate if You Own Property Abroad?
2 July, 2019 6 minutes reading time
The principal aim of the EU Succession Regulations (EU 650/2012) (also known as Brussels IV) was to unify succession laws across EU member states.
Brussels IV has been in place since 17 August 2015. Whilst the UK (and Ireland and Denmark) opted out of this legislation, it’s still relevant to any UK resident individuals who own assets in any other EU member state. The Regulation applies to deaths that occur on and after 17 August 2015.
Why is Brussels IV Important?
A growing number of us own assets abroad as well as at home. Under Brussels IV, if you hold assets in those EU member states that are signed up to the Regulation, the default position is that the succession of those assets on death will be governed by the country’s law in which the individual died and/or was habitually resident.
However, in your Will, you may apply the law of their nationality to the succession and administration of their estates.
So, it’s very important to think about your assets in the context of the country’s laws, where your assets are held and how you can best protect them for future generations.
Brussels IV, Your Estate and Brexit
Brexit’s outcome doesn’t change how Brussels IV might affect you. You’ll be affected if both of these are true:
- You have ties to multiple countries (for example, living in one country and owning property or being a citizen of another).
- At least one of those countries is an EU member state (excluding the UK, Ireland, and Denmark).
How Will Brussels IV Affect You?
Even after Brexit, Brussels IV still affects UK citizens with assets in EU countries. This is because the UK never joined the regulation, so it’s already considered a “third state” for its purposes. Therefore, understanding how each country’s laws apply to your estate is essential.
For example, some EU countries (like France and Spain) have “forced heirship” rules. These regulations stipulate specific portions of your estate go to a close family member, limiting your freedom to choose beneficiaries.
Previously, these differing European inheritance laws caused confusion and conflict. Brussels IV, introduced in 2015, aimed to reduce this uncertainty by creating common rules for participating EU countries. Significantly, even wills created before August 17, 2015, can be affected by Brussels IV.
Deciding Which Jurisdiction Should Apply Under Brussels IV
The law that will apply to your estate will be the law of the country where you are habitually resident at the time of your death.
Exceptions
This does not apply when:
- You are more closely connected with another country when you died; or
- You have chosen to apply the law of your nationality instead.
This choice can be set out expressly in the terms of your Will or by adding a Codicil. You do not need to be explicit. If you have already made a Will following the law of your nationality, it can be treated as if you had chosen to apply that law indirectly. This applies to Wills made even before Brussels IV came into force.
Example – Living, Working & Owning Assets in Spain
According to recent statistics, over 300,000 Brits own property or live in Spain. Perhaps, in the excitement of the move, many fail to consider the effect on their Will.
- If you have lived in England all your life but own a holiday home in Spain, the default position as of 17 August 2015 is that the succession law of England and Wales will apply to your Spanish assets on your death (as you are habitually resident in England).
- Alternatively, if you were born in England but have recently moved to Spain and die whilst living (and own assets) there, it may be unclear whether the habitual residence default should apply or whether you are more closely connected with England and Wales.
However, if you have already made a Will under the law of England and Wales, you may have made an indirect choice for the law of England and Wales to apply to your succession.
Spanish law dictates that property that passes to your family members will have to be divided in specific proportions that are not your choosing.
Clearly, it’s very important to understand the implications and make your wishes as clear as possible. You must be careful when relying on an English Will concerning your Spanish property.
That said, the most important part of Brussels IV was a provision that an individual may choose, in their Will, to apply the law of their nationality to their succession and the administration of their estate.
Spanish & English Wills. One or the Other or Both.
Do you need two wills if you own property in Spain and the UK? Spanish law recognizes valid wills from any country, and an English will can cover your Spanish property. Previously, it was common to have separate wills for each country, but in 2016, Spanish authorities recommended against this.
However, having two wills can still be beneficial. A Spanish Will means the original document is securely held by a Spanish notary and written in English and Spanish, reducing the risk of loss or misinterpretation.
Also, Brussels IV generally applies the law of your habitual residence (where you live) to your estate unless your will states otherwise. So, if you live in England and own Spanish property, English law usually applies.
If your Spanish assets are distributed according to an English will, it suggests you intended English law to govern your estate. Even so, a Spanish Will can remove any doubt and ensure English law applies, no matter what.
Tax Implications
The Brussels IV regulations only apply when determining who benefits from your estate. When your assets are held in another jurisdiction, they will be taxed following the rules of that country. This is subject to any double tax treaties in existence.
As you’d expect, the tax implications of including structures (such as trusts) could be very costly. So, taking professional advice (in the UK and beyond as appropriate) makes sense before any Wills are finalised. Inheritance tax rules often change, and you could easily miss a tax-saving opportunity.
Be mindful, too, that claims against your estate may still be possible if succession rules are overridden in your Will.
Our Advice
Review your Will now to see if Brussels IV affects you or your family. Get advice in each country where you own assets to understand the tax implications before signing any documents.
If you want to discuss this or any aspect of estate planning, please contact our specialist Wills, Trusts & Probate team. We’re here to help.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.