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New European rules on inheritance -  >Détails<

SUCCESSION

New European rules on inheritance British citizens with property abroad should take advantage of

The European Union Succession Regulation No 650/2012 (Brussels IV)

Are you one of many UK people living in France? Do you have properties in more than one Member State of the European Union? Would you like to apply UK inheritance law on all your assets in your Will? The new European regulation opens for the first time the possibility to choose the law to be applied to your entire estate. Even though UK opted out, the new regulation will be very important for British citizens holding assets outside of the UK since almost all EU Member States will apply it. As we move closer to its full implementation on August 17th 2015, here are some facts you should be aware of:

What’s new

The new regulation moves towards a system where the law of one jurisdiction applies to an entire property, even where the deceased held assets in several EU countries.

UK, Ireland and Denmark have opted out of the regulation, so it is not applicable in these Member States, however their citizens can still take advantage of the new provisions if they reside and/or have assets in any of the other Member States.

The main rule states that in case of no election, the law which will apply to the entire estate shall primarily be determined by the habitual residence at the time of death or, secondly, by where the deceased was manifestly most closely connected to.

The most important provision allows now a person to choose by express declaration in their Will which law applies to their entire property, but the choice is restricted to either where they habitually reside or their nationality.

It is important to remember that the regulation does not cover taxation of estates but it could impact on tax planning.

Importance in the Franco-British context

According to French law, if you are resident in France, French law will apply to all your worldwide assets. If you are not French resident, it will only apply to your assets held in France.

The most relevant but not only difference between succession laws in France and UK is the specific protection of children of the deceased under French law. According to the provisions of the Code Civil, children can not be disinherited, which significantly limits the free disposal of your property. Depending on the number of children, you will not be able to dispose freely of ½ up to ¾ of your estate. Since in UK no such limitation is known, because under British law a person may make a Will leaving his/her estate to any chosen beneficiaries, the new regulation makes it possible to regain the full freedom of disposal. This can be useful not only if you consider disinheriting your children, but simply when you wish to shape the shares of the inheritance according to your personal plan and the structure of your family.

UK citizens can therefore choose the British law as law governing their French assets on the grounds of art. 22 paragraph 1 of the regulation based on their nationality. In that case a French notary has to apply UK law to a Will prepared in France dealing with French (and other) assets. Again, it does not matter that UK opted out, it is only relevant that France applies the regulation in question. The Will has to specify which law should be applicable and on which grounds the choice of law has been made (here: UK nationality, art 22 I. of the regulation.)

Relevant periods

A choice of law in a Will made before the entry into force of the regulation on August 16th 2012 would be invalid.

However, a Will prepared between the entry into force of the regulation and its implementation on August 17th 2015 will be legally effective regarding the chosen law only if the testator dies after August 17th 2015. After this date, the new European rules will apply to all successions within the EU Member States except UK, Ireland and Denmark.  

Legal issues and practical challenges

Readers knowing UK inheritance rules may have noticed that British law traditionally only applies to assets situated in UK. In case of immovable property, applicable law is the law of the country, where the property is located. This means that the law to be chosen basically sends the case back to the EU Member State, here France. Fortunately, this mechanism known as renvoi is blocked by the regulation itself, which states in art 34 par. 2 that “No renvoi shall apply with respect to the laws referred to in Article 21(2), Article 22, Article 27, point (b) of Article 28 and Article 30.”

A practical challenge could be to find a French notary ready to execute a will applying UK law, but it is in fact more of an obligation of notaries, to adapt to changing laws. The regulation has been adopted two years ago and is not only relevant in the Franco-British context, since it opens the possibility to apply any succession law of any state of the globe, not only one of a EU Member State. Solicitors experienced in representing British clients, like myself, usually have a network of English speaking notaries they work with on international cases.

Conclusions

Therefore, there is no doubt about the need to consider the options opened by the new EU law while preparing or changing a Will. Therefore, it is recommended to consult a French solicitor or notary already before August 2015 in order to assure the profits of the new legal possibilities. Please note, that the first consultation with a French lawyer is usually free. For more details do not hesitate to contact my office by phone or email.