EU Regulations tend to be viewed as adding complexity to our lives rather than the reverse. That view may often be well-founded. But the EU Regulation concerning succession to property on death is welcome.
- Where people own property abroad succession matters on death can prove complex. The EU Regulation, commonly known as , should make such things less complex than in the past.
Why the complexity?
- Brussels IV aims to dispel much of the complexity. But why was there the complexity anyway?
- When it comes to dealing with the succession to someone’s estate on death the question arises as to what law is to govern that succession. In other words, which country’s laws should apply to the succession.
- Often the answer to that question seems pretty obvious. But sometimes it isn’t: for example if a Scot living in France dies is it Scots law or French law that applies to the succession to their estate?
- Scots law uses “domicile” as the determinant of what law governs succession. “Domicile” for these purposes means the place where you have your permanent home to which, if absent, you intend to return. If you are “domiciled” in Scotland then, under Scots law, it is Scots law that governs the succession to your estate.
- And, under Scots law, the rule is that Scots law will govern the succession to the deceased’s “moveable property” (i.e. broadly everything apart from houses and land) worldwide but the succession to “heritable property” (i.e. broadly, houses and land only) will be governed by the law of the place where the house/land is situated.
- Other countries however use different determinants to decide what law governs succession: for example, some use “habitual residence” and others use nationality. So if someone dies domiciled in Scotland but owning property abroad there may be a conflict between the laws of the two jurisdictions.
- To take one particular (fictional) instance of potential conflict: suppose a British national domiciled Scot dies owning a house in Arcadia; suppose Arcadia uses nationality as its determinant for succession matters.
- Under Arcadian law the succession to the house is to be governed by Scots law – being the relevant law of the deceased’s nationality. But the difficulty is that – according to Scots law – the question falls to be governed by the law of the place where the house is situated i.e. Arcadia. So there is scope for something of a “Catch-22” here.
- That is probably enough to indicate that these matters can prove tricky. Brussels IV – happily – makes them less so.
Brussels IV – some background
- Like most EU Regulations, before getting to the actual legal provisions there is a lengthy preamble setting out the general purpose of the Regulation.
- In particular, the preamble includes the following:
“The scope of this Regulation should include all civil-law aspects of succession to the estate of a deceased person, namely all forms of transfer of assets, rights and obligations by reason of death, whether by [will] or a transfer through intestate succession [i.e. where there is no will] …”
- But:
“This Regulation should not apply to revenue matters [e.g. Inheritance Tax] or to administrative matters of a public law nature [e.g. the administrative matters relating to any official authority required to administer property in a particular jurisdiction] …”
Brussels IV – some of the nitty-gritty
- One preliminary point to make is that the UK opted out of the Regulation. Nevertheless, the Regulation is relevant for UK individuals who have property in a Member State which opted in (i.e. all Member States – apart only from the UK, Denmark and the Republic of Ireland). Member States who have opted in are referred to below as “Regulation States”.
- Essentially, what the Regulation does is to provide that a single national law shall govern the succession to a person’s “moveable” and “heritable” property on death. This applies both where someone has left a will and where they haven’t.
- The default rule is that the governing law will be that of the country of the deceased’s “habitual residence” at the time of death. Sometimes, the country where a person is “habitually resident” might not be clear. So the Regulation provides that people with property in a Regulation State may elect in their Wills that the law of their nationality should apply to the succession of their relevant EU property so as to make the position clear.
- Although the Regulation only applies in relation to those dying on or after 17th August 2015 it is possible to make the election now. In particular, it is possible to make the election in your Scots Will.
Conclusion
- If you are domiciled in Scotland with foreign property in a Regulation State then, for now, to allow for the possibility of death before 17th August 2015 “best practice” may be to have two separate Wills: one covering the property in the Regulation State and the other covering property everywhere else.
- Subject to that, once the Regulation takes full effect (after 17th August 2015) a single Scots law Will should suffice provided there is an election that Scots law governs the succession.
- It will nevertheless still be advisable to seek foreign law advice.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Kathryn Bready: kathryn@mitchells-roberton.co.uk