Written by Roger Peters
The European Union has made a helpful attempt to resolve the disconnect between succession laws in the different member states, and most notably those such as England and Wales with a common law freedom of disposition, and countries with the Napoleonic laws of fixed inheritance entitlements for family members.
Until the introduction of “Brussels IV” on 17 August 2015, English owners of holiday villas, gites and other land and buildings on the Continent were unable to avoid the imposition of legal rights of spouses and children to share in the inheritance of the property concerned, without convoluted and expensive arrangements to transfer ownership into a corporate or other structure which side-stepped the rights, or simply placing faith in the goodwill of the family to fall in with their testamentary intentions notwithstanding the conflict with the laws of the country concerned. Even that continued to create difficulties and expense on subsequent deaths, or on the eventual sale of the property.
The objective of Brussels IV was simple. It allows any European citizen to make a Will according to the law of his or her nationality, or (although for UK residents this is at present uncertain) of the country in which they have their permanent residence, and elect in that Will that it and the law on which it is based is to have effect as regards all their property situated anywhere within the countries of the European Union.
The United Kingdom (together with Ireland and Denmark) has, for the time being, opted out of this arrangement, and the best advice for nationals or permanent residents of other European countries who have a house, apartment or other landed property in England and Wales remains to make an English form Will covering that property, in addition to a Will in their country of residence.
As far as English and Welsh citizens are concerned, the UK opt-out has no effect and they are at liberty to make an English form Will containing a Brussels IV election in the expectation that it will apply to the property they own in other EU countries in exactly the same way as it applies to their English property.
It has to be noted that Estate taxes in EU countries will be applied in accordance with the provisions of the English Will, but levied according to the tax rates and allowances in that country. Most European countries levy estate taxes on gifts and inheritances by wives and husbands, in contrast to the UK tax free approach in most cases.
The election must be included in a valid Will or codicil, and if this is done, care must be taken to ensure that any existing Will made in the EU country concerned is revoked and the new English form Will is in a form which clearly extends to apply to all EU assets.
It has to be said that so far Brussels IV is largely untried in practice, and there is little experience yet of the practicalities of its adoption by legal authorities in the other EU countries. There may be issues of interpretation, particularly if the local authorities have not previously encountered Brussels IV, and inevitably some delay as the English form Will will usually have to be admitted to probate in the UK before the probate or similar process can be begun in the EU country or countries concerned.
It follows that in some circumstances, a local Will in parallel to an English form Will dealing with the other worldwide property should still be the preferred approach; but Brussels IV election could well provide a solution for those with a second marriage and step-children or other complex family structures, or shared ownership with third parties.
It must be emphasised that this is an overview of a complex situation and no action should be taken in reliance on this note without first taking detailed professional advice.
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I am senior partner at Gordon Dadds, working in both private client law and charity law. I began my career at the long-gone Peacock & Goddard, as an articled clerk and then assistant solicitor, before joining Gordon Dadds in 1973. I have 45 years post qualification experience and my speciality lies in estate planning and it is the challenge of getting this right both tax-wise and for the family dynamics that I find absorbing. Outside work, I enjoy spending time with my family, travelling and visiting restaurants. When I have time, I’m also passionate about reading, particularly about English history.