types of wills

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REGULATION 650/2012 OR THE BRUSSELS IV

Succession planning for families where there is an international or European dimension has been simplified by the European Succession Regulation No.650/2012 or Brussels IV.

If you do not have assets in the EU States, the new Regulation will be of little more than academic interest.

For British citizens who do have assets in the EU States, there are changes due which should enable them to know in advance which law will apply to their succession. This is the objective of Reg.650/2012.

English common law means you can leave your assets to whomsoever you wish, (subject to the Inheritance Family Provisions legislation). This is known as testamentary freedom.

In continental Europe a big part of an estate (often around half) is reserved for the surviving children of the deceased and must be equally divided between them. This "forced heirship" makes it impossible to disinherit financially irresponsible children; it also makes it hard to reward the deserving by, say, leaving more to a daughter who gave up a career to care for her ailing parents.

Also "clawback" laws in many countries stop parents from dodging forced heirship by giving assets away in their lifetime. This applies to gifts made in the last years of life (two years in Austria, ten in Germany), or much longer: in some countries, no time limit applies.

From August 17th 2015, when the new regulation comes into operation, the succession rules imposed by forced heirship will change. Any British national who has property in one of the participating States can choose the country of their habitual residence or nationality as the law to govern who gets what when they die.

In other words, you can put a provision in your wills stating that you wish English law to be the applicable law for their assets situated in an EU State.

"I, Tom ..., wish the devolution of my property in Spain to be governed by the law of my nationality". Tom can put this provision in his will even if he lives in Spain and not in England. This is known as a nomination and clients with property in an EU state should consider a new will to take advantage of Regulation 650/2012 and make the appropriate nomination.

The new regulation applies to all citizens wherever they hail from, so Bruce, an Australian national, with property in a participating EU State can make a nomination for Australian Law to apply to his property in France.

For example, Donald, an Englishman, retired to live in Spain. He has a house, bank account and furniture in Spain and a house in England which he rents out for income. He states that he wishes succession of his assets to be governed by some part of Britain, for example English law, as opposed to the law where he is resident.

(Note: Local tax laws will apply to assets in the E.U. and English tax laws will apply on death in the usual way).

The deceased may choose the law of his nationality to apply to succession of all of his assets across the Brussels IV zone. In other words, there is now an opportunity for people with property in a Regulation State to elect in their Wills that the law of their nationality should apply to the succession of their relevant EU property.

The selection of the law of nationality must be made expressly in a will or analogous document. The application of these clear rules to the estates of individuals dying after 17 August 2015 should simplify matters.

For English nationals with foreign assets, it would be advisable in most cases for them to make an election that succession to their assets situated in the Brussels IV zone should be via English law.

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