Do you own assets outside the UK? The EU Succession Regulation (Brussels IV): effects for UK Citizens and EU citizens living in the UK.

On 17th August 2015, the EU Succession Regulation is due to come into effect – more than three years after it was initially passed. Known formally as EU Succession Regulation No.650/2012 and nicknamed ‘Brussels IV’, the regulation will apply to citizens of EU member states, except for the UK, Ireland and Denmark, who have opted out. Although the UK has opted out of the agreement, UK citizens who hold cross-border assets in countries that are part of the ‘Brussels IV’ zone will need to be aware of the impending changes. Firstly, it is important to get an understanding of what the EU Succession Regulation provides for.

What is the EU Succession Regulation?

The EU Succession Regulation is predicated on a number of clear rules, drawn up to establish a single, uniform process for succession across the ‘Brussels IV’ zone. The idea is to simplify succession of cross-border assets and make procedures both faster and cheaper.

The default position

The succession law applicable will be the law of the state in which that person was “habitually resident at the time of their death”.

Can this position be changed?

There is a clause within the regulation which allows a person the opportunity to change the law which is applicable to their estate upon death. The key points are:

Under a choice of law provision, a person may change the law to that of his/her own nationality, rather than that of their habitual residence at the time of death.

If a person possesses more than one nationality, they can choose the law of any of these nations to apply to their succession, even if they are outside of the ‘Brussels IV’ zone.

This choice must be stated clearly in a will or similar document.

Are there any problems with the regulations?

There are, nonetheless, some areas of ambiguity within the EU Succession Regulation.

It does not provide clarity on certain important areas of civil law, such as succession of matrimonial property regimes.

In addition, the regulation says little about how trusts might be affected, and lifetime gifts and transactions are generally excluded.

Another potential issue lies in the provision which allows jurisdiction in one country to refuse to apply the law of another country if it is deemed to be ‘incompatible’ with their public policy.

How the EU Succession Regulation might affect UK citizens

Although the UK has opted out of the EU Succession, there are two main ways in which it can still affect UK nationals, namely if a UK national is habitually resident in an EU member state governed by Brussels IV, or if a UK national habitually resident in the UK holds assets in an EU member state governed by Brussels IV.

If a UK national is habitually resident in an EU member state governed by Brussels IV:

If you are a UK national who is habitually resident in a EU member state governed by Brussels IV you will have  your succession governed by the laws of that state, unless stated otherwise under the choice of law provision, or clearly expressed in a will or similar document. This means that unless that individual updates their will, the law of the jurisdiction in which  a UK national was habitually resident at the time of death will govern the deceased’s estate, whether that is the law of that jurisdiction or the deceased’s declared choice of law.

If a UK national habitually resident in the UK holds assets in an EU member state governed by Brussels IV:

If you are a UK citizen who is habitually resident in the UK and who holds assets in a member state governed by Brussels IV, you can elect in your will to have English succession law (or the law of whichever UK state you are closest to) to apply to your relevant EU property. However, if you do not elect in your will to have English law (or the law of whichever part of the UK you are most closely associated with) apply to your property held in that country then it might result in the law of that country applying to that property.

Overall, the EU Succession Regulation should be largely beneficial for UK citizens once it comes into effect in August. Succession procedures should be easier, faster and cheaper. UK citizens will retain their right to apply UK law not only to their domestic assets, but also their assets held abroad in EU member states.

If you need any advice on succession planning, do not hesitate to contact an expert at Progeny Private Law. We can determine how your cross-border assets might be affected by the EU Succession Regulation, and help you make any necessary changes to your succession plan.
A link to a downloadable PDF version of this article can be found here.