Making a will can be a complicated enough process at the best of times. This only increases once there is an international element to it. What happens to someone’s estate if they have property and assets in other EU countries such as France and Spain?
This is where Brussels IV comes in.
What’s that?
Brussels IV is a new piece of European law (Regulation EU 650/2012) which affects all countries in the EU, except the UK, Ireland, and Denmark. It came into force on 17 August and it seeks to bring a level playing field by ensuring that one set of laws applies to the whole of an estate, regardless of the location of the assets within the EU.
Prior to Brussels IV, estates with assets in more than one EU country were very complex because the personal representatives (the administrators and executors) had to deal with numerous hurdles, and the potential for numerous different legal systems to apply to different parts of the estate.
But wait, if it is not being brought into force by the UK why does it matter to me?
Brussels IV will be relevant to anyone who has assets in EU countries where the regulation is in force. So, for example, if a British national has property in France or Spain the regulation will affect them because it will be relevant to their assets located overseas.
OK, so what is the effect of Brussels IV?
Basically, it will decide which law is applicable to the deceased’s estate.
The objective of Brussels IV is to ensure that only one country’s laws apply to the deceased’s estate. In making that decision, the regulation uses ‘habitual residence’ as the determining factor. The laws of the country in which a person is habitually resident at their death will apply to them unless they have made a declaration during their lifetime. For example, a British national who lives in France, and has assets in both France and England, may declare in their English will that they are habitually resident in England, and therefore the law of England and Wales will apply to both their English and French assets.
This could mean assets located in European countries that operate a ‘forced heirship’ regime can be dealt with by English law, which does not. Such a regime often has the effect of requiring certain individuals to receive a specific proportion of the deceased person’s estate. This can have adverse tax implications.
Does this have anything to do with jurisdiction?
Yes. Jurisdiction refers to which country’s courts are able to decide matters about an estate (e.g. where there is a dispute). The effect of Brussels IV is to ensure that the country whose courts are able to make decisions about an estate is the same country that the deceased was habitually resident in. Therefore, making a declaration in an English will that you are habitually resident in England means that the English courts would have jurisdiction if there are disputes about foreign assets.
Hang on, what’s ‘habitual residence’?
The meaning of habitual residence has been the subject of much debate, but it roughly means the place where that person has established, on a fixed basis, a permanent and habitual centre of interests such as their home, business affairs, or their children’s schooling. Whether someone is habitually resident in a place can be clearly determined by the facts, but the issue can be complicated if they live or spend time in more than one country. However, making a declaration in your will about where you are to be habitually resident can simplify things considerably.
Anything else I should know?
A European certificate of succession has been introduced which will allow personal representatives (i.e. the executors) to prove to countries across the EU that they have the authority to deal with the estate of the deceased. This will reduce many headaches, particularly where there are assets located in a number of different EU countries.
So should I make an election of habitual residence in my will?
It is a difficult decision whether to declare that you are habitually resident in England and Wales or not. Inevitably, to make an informed decision people should take specific advice about the succession and tax laws applicable in the countries where they own assets.
Call me doubtful, call me cynical – call me anything you like as long as you don’t call me late for lunch – but I wonder. If John owns homes in England and in France – and has a French wife and adult children from whom he is estranged – and makes a will declaring himself to be of habitual residence in England and leaving everything to Miss Fifi La Strappe (or the cats’ home) – are the Frwnch courts really going to let that take effect and leave Mme and the children to try their luck in England under the Family Provision Act?
We shall see!
I agree Andrew. And let’s not forget the ‘against public policy’ get-out clause that the French authorities may pursue, or the fact that English law would allow claims from those who under the French system would have gained.
Our Notaire told us that we ( living in France with no assets in the UK) can’t bypass French inheritance laws with this regulation because English Law says it’s the law of the country in which the property is located that applies. Catch 22 it would appear? With a donation entre epoux in place to allow me some protection from children who have the right to cash in their chips, it could be construed that we have chosen French law anyway. I’m not sure I’d be willing to remove that, on the hazy promise of something that has yet to be proven in the courts. Still, at €100 a declaration, at least someone’s making money from this.
Just to get this straight, I am assuming that – as my husband has grown children and I do not – and we live as residents of France and have no other property, we cannot avoid – on his death – that his children inherit automatically a portion of my home. I would prefer them to inherit on my death (if their father dies first). We cannot insist that our English will (leaving the house first to me and then, on my death, to his children) will apply?