By Catherine Guthrie
It is often said that the world is shrinking. People no longer live their lives in a single village, county or even country. Estate planning for families in this situation can be complicated and simplification would be welcomed. The European Succession Regulation No.650/2012 (or"Brussels IV") promises that.
Brussels IV will apply to the estates of individuals dying after 17th August 2015. However, the first point to note is that the UK hasn't actually signed up to Brussels IV.
Despite this, its effects will be felt.
The reason that European succession planning can become complicated is due to the potential for conflict between the relevant countries' respective"private international law" (the rules which decide which country's law decides a particular issue). For example, a person might have property in France and Italy, whose Civil Codes take different approaches to dealing with a deceased estate. Who decides?
Brussels IV attempts to deal with this issue by implementing a series of relatively straightforward rules:-
- The default position is that the law of the country in which the deceased was habitually resident will apply to the deceased's estate. Accordingly, if your usual residence is in France, French succession law would apply to your entire estate, even if some of it was held in Spain or Italy, for example. The habitual residence need not be a Brussels IV state i.e. it could be Scotland.
- If the deceased was"manifestly more closely connected" to a jurisdiction other than the one in which they were habitually resident, then the law of that jurisdiction would apply.
- If, however, a person is living in a country other than that of his nationality, he may choose the law of his nationality to apply to all his estate in Brussels IV states. If he has more than one nationality, he can choose which of these he would like to apply. The selection must be made formally, in a Will or equivalent document. However, if a person is habitually resident in one country, and makes a Will under the law of the country of his nationality, this may be deemed to be a choice of law in favour of his nationality. Unfortunately however, this point is not yet certain.
On the face of it, these rules seem fairly straightforward. However, it is not without its problems. The effect on succession of matrimonial property, for example, is not considered. In addition, a state that has opted in to Brussels IV may refuse to apply the law of another country if it would be"manifestly incompatible with the public policy".
So what do you do?
If you live in/have assets in/are thinking of moving to a Brussels IV state, we would strongly suggest that you take advice on how it will affect your succession planning. It would also be sensible to review documents affecting your matrimonial property, due to the shortcomings of the regulation. You may wish to make elections to apply Scots Law to all your assets, whether in Scotland or in a Brussels IV state. However, depending on your circumstances, property and family dynamic, our advice may differ.
If you would like to discuss this in more detail, please contact us and we would be happy to talk with you.