Change in Succession Law for British Nationals
Author: Zara Munday
The upcoming changes to European Law will allow greater flexibility to owners of foreign property and give individuals increased control over who they can leave their property to once they have passed away. The following article is relevant for individuals who have moved from England to a participating EU state and for those who live in England but have property in a participating EU state.
At the moment many European Countries’ legal systems prescribe who receives your property when you die. However, new legislation coming into force on 17th August 2015 will allow British owners of property who are habitually resident in any participating EU state (this excludes the UK, Ireland and Denmark) to choose which legal system their foreign property will be governed by.
Property owners can nominate either the law of the country of their habitual residence or their nationality. This means that if you are British and own a property in Spain and wish for your property to pass under the terms of your English Will, this will now be an option.
While the default position is that property will pass under the laws of the individual's habitual country of residency, British owners of foreign property may like to plan ahead for this change and make a nomination within their English Will. This can be done before the legislation comes into effect. Property owners should, however, be aware that the nomination will not take effect if you pass away before 17th August 2015.
Failure to make a nomination in your Will means that the following standard test will be applied, for example:
- If an English owner of a French property is habitually resident in France at the time of death, then French succession law will apply to the French estate.
- If an English owner of a French property is habitually resident in England at the time of death, then English succession law will apply to the French estate.
- If an English owner of a French property is neither habitually resident in France at the time of death nor in England, then it could be either English law or the law of the actual country of habitual residence. This scenario would need to be legally determined on the individuals circumstances.
The position on Inheritance Tax remains unchanged and national law continues to deal with any Inheritance Tax liability. However it should be noted that having only one legal system applying to your worldwide assets could present you with new tax planning opportunities.
If you would like assistance in reviewing your current Will or drafting a new Will in light of the upcoming changes, please contact Zara Munday, Tel: 01306 502240 or by email Email: z.munday@downslaw.co.uk .
