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Owners of property in France should consider making a new Will now!
From August 2015 a new EU legislation may have implications for anyone who owns assets in an EU State which has “opted in”. The Regulation, known as “Brussels IV”, was passed in 2012. It will not come fully into force until 17 August 2015 and will only apply to the estates of people who die on or after that date.
The aim of the Regulation is to ensure that if the deceased owned assets in more than one participating EU State, the estate is administered under a single law and by a single authority. If UK nationals living in France wish to avoid the application of French law to their estate they are strongly advised to make a Will opting for the law of their nationality to apply instead.
The current position
Currently the starting point for establishing the law applicable to the administration and inheritance of a UK or French estate is the concept of “domicile”. Whilst a challenging concept to apply, it can be summarised as meaning a person’s “permanent home”.
Domicile is not the same under English and French law and the question of whether a person was domiciled in France at the date of death must be examined on a case by case basis. The French concept of domicile takes into account such criteria as the person’s place of principal establishment, where they paid their taxes, where they were registered on the electoral roll, where they received their correspondence and where their family, professional and emotional ties were.
If a person dies whilst domiciled in the UK, the inheritance (or “succession”) law of his country of domicile will apply to the distribution of his estate. So, for example, if the person was domiciled in England the inheritance law of England and Wales will determine who his heirs are and to what extent he is free to leave his assets to beneficiaries of his choosing. However there is one important exception to this rule – where the deceased owned land and/or buildings abroad, the inheritance law of the country where the land/buildings are situated determines who will inherit those assets.
Likewise, if a UK national dies whilst domiciled in France, French succession law applies to the distribution of his estate – with the exception of any land/buildings he owned outside France (which are governed by the succession law of the country in question).
At present, therefore, a person has no choice but to accept that French succession law will apply to any land/buildings he owns in France at the date of death. Whilst many people are happy with this situation – because French law contains “forced heirship” provisions favouring children (and in some circumstances the surviving spouse) – others are not and may well wish to take advantage of the new EU Succession Regulation to avoid the application of French law to any part of their estate.
New EU Succession Regulation – effective for deaths on or after 17 August 2015
An EU Regulation, known as “Brussels IV”, was adopted in 2012 with a view to facilitating cross-border successions and the administration of estates in the EU. The new rules apply to the estates of individuals who die on or after 17 August 2015 owning assets in a participating EU State, regardless of their place of death or nationality.
The aim of the Regulation is to ensure that an estate is administered under a single law and by a single authority, even if the deceased owned assets in more than one participating EU State. The default position is that the law of the deceased’s habitual residence at the time of death shall be the law applicable to his estate as a whole, whether or not it is the law of a participating State. However the key point is that individuals will be able to choose the law of their nationality instead, should this suit them better.
However, the UK (in common with Ireland and Denmark) has opted out of the Regulation and so is not bound by it. How, then, will this affect UK nationals owning assets in a participating EU State?
For UK nationals who die whilst habitually resident in France, if they haven’t made a choice of law (by Will) their worldwide estate will be governed by French succession law. The only exception to this rule is that any assets situated in a non-participating State will pass in accordance with the law applicable in that country (e.g. a house in England will pass in accordance with English law). However those assets will still be brought back into account in the administration of the estate in France.
Consequently if UK nationals living in France wish to avoid the application of French law to their estate they are strongly advised to make a Will opting for the law of their nationality to apply instead. The law in question will be the law of England & Wales/Scotland/Northern Ireland, as relevant – although if a person has multiple nationalities he will be able to choose which of those national laws he prefers.
For UK nationals who die whilst habitually resident in the UK but with assets in France, although in principle under the Regulation their estate will be governed and administered by the relevant law of the UK, in practice this will not be the case because the UK has opted out of the Regulation.
Consequently the UK will continue to deal with matters in accordance with national rules only. This means that the UK Courts will continue to refer back to France and French law as the applicable law governing a person’s French property (i.e. land/buildings) – and France will have to accept this.
As in the case of a UK national resident in France, the only way for a UK national resident in the UK to ensure that French inheritance law does not apply to his French property is to make a Will opting for the law of his nationality to apply instead. If a choice of law is made the Regulation does not allow the UK Courts to refer back to French law in respect of the French property and so the choice of national law will take effect.
Conclusion – Make your choice of law now!
Although the Regulation only applies to the estates of people who die on or after 17 August 2015, we strongly recommend that you make your choice of law by Will now. Your choice of law will then become effective in August 2015 even though made now.
Imagine the situation where you decide to wait until after 17 August 2015 to make your choice of law, but in the meantime you lose the mental capacity to make a Will…any unwanted consequences can be avoided if you act now! Because there is still a year to go until the Regulation becomes fully effective, your Will must also deal with what will happen if you die before then, whilst the current law still applies. The interpretation and effects of the Regulation will develop and become clearer over time.
In the meantime, we recommend that you seek specialist advice in relation to your particular situation and the options currently available to you.