Owning a property overseas can be a very rewarding experience but many owners fail to think about what will happen to the property when they die. New rules now apply (known as Brussels IV) to property owned within the EU, which may change what will happen to your estate when you die.
If you have a connection with more than one country, for example you live in one country and own property in another, Brussels will affect you if one of those countries is a member of the EU.
Each country has its own rules to decide which law applies (known as conflict of laws rules). The interaction of these rules is often complicated and unclear, making it uncertain who will inherit property overseas and your estate. Brussels IV aims to reduce this uncertainty. These rules apply to deaths occurring on or after 17 August 2015.
What country’s law applies to my estate under Brussels IV?
In countries where Brussels IV applies, the rule is that the law of the country where you are habitually resident when you die governs succession as a whole. This default position can be overridden if you choose to apply the law of your nationality instead. You can make this choice in a Will or Codicil.
What are the advantages of making a choice of law in my Will?
For many people, choosing to apply the law of their nationality will ensure that their estate is governed by the law with which they are most familiar.
Example
Bob and Beryl are English and live in the UK. They want to know how Brussels IV will affect their holiday cottage in Brittany.
France will apply the rules in Brussels IV. If Bob and Beryl do nothing the interaction between Brussels IV and English conflict of law rules is likely to result in the cottage being governed by French law because it is immovable property located in France. As a result of this French forced heirship rules will apply to the cottage.
If Bob and Beryl include a choice of English law in their Wills, France will apply English law to the property which means they can leave it to whoever they want.
Does the UK’s decision to leave the EU make any difference?
At the moment it doesn’t. This is simply because the UK never opted into Brussels IV and as such they are not bound by the rules.
What should I do now?
If you own property overseas and Brussels IV affects you, it is recommended that you review your Will (or make a Will if you don’t have one) to ensure that your estate will pass to your chosen beneficiaries. Your existing Will may be treated as making a choice of law, even if it doesn’t mention this. This may mean that your Will does not have the outcome that you expect.
This article first appeared in Devon Life, October 2016 issue