UK expats must review wills ahead of EU succession rules
UK residents with assets in Europe could become liable for a heavy tax bill on their death as a result of changes in EU cross-border succession rules due to become effective in the last week of August 2015. Despite the UK exempting itself from the application of “Brussels IV” on the 17th of August, those with European ties could be caught by its attempts to simplify succession across the EU by applying the succession rules of the deceased’s country of “habitual residence” at their time of death. UK residents with assets in Europe, particularly real estate, should check to see if their Will needs to be revised to include a clause indicating that all assets will be subject to the succession rules of their nationality rather than their habitual residence, upon their death. Initially it looks like Brussels IV is not going to affect UK residents because the UK has opted out, so if you are a UK person with all your assets in the UK then you are not affected.
However, if you are a UK citizen residing elsewhere in Europe, a UK citizen with property elsewhere in Europe, or an EU citizen residing in the UK, then you are affected by the rules because you have assets or are living in a jurisdiction that is participating. Brussels IV attempts to unify the UK, Ireland and Malta, which has a common law system and allows testamentary freedom – the individual has complete control over the succession of their assets – with the rest of Europe which operates under civil law, and their forced heirship provisions on death. So far, 25 member states of the EU have chosen to implement the legislation with just the UK, Ireland and Denmark exempting themselves from it.
Clawback One of the UK’s key reasons for opting out of the legislation was the presence of so-called “clawback provisions” in many civil law codes. Such a clawback could mean that lifetime gifts made by a UK person over their life who do not marry with civil law requirements could be clawed back upon that person’s death. Clawback could also affect assets passed to lifetime trusts: structures which are not widely recognised in civil law countries. Many civil law countries also have matrimonial regimes – either applied by default or choice – which concern the rights and powers of spouses over property in the event of the break-up of a marriage of the death of one spouse.
England and Wales do not have a matrimonial property regime, so in effect marriage does not affect the ownership of property. Over-complication in that the EU has not attained the simplicity of succession across Europe it was hoping for with Brussels IV resulting in outstanding areas of conflict meaning there is a great deal still to be clarified, and may have only served to add to the confusion. Over the centuries European states have built up vastly different rules around succession, and it was always going to be difficult to try and unify such disparate systems. It will only be when an EU wide regime seeks to accommodate common law that we might arrive at a position of certainty in cross-border succession.
Are you a UK Expat? Do you own Property in Europe? Contact me for help with your Will before it is too late