The UK decision to opt-out of the Succession Regulation
Three member states, the United Kingdom, Ireland and Denmark, will not adopt the provisions of the Succession Regulation, which came into force on 17th August 2015.
The aim of the Succession Regulation was to harmonise the conflict of succession laws between the Member States, and allow citizens of member states of the European Union the ability to plan their succession, under the law of one country, even where they own assets in more than one country.
It will now be clear, across the member states of the EU, that on death a person’s succession will be govened by the law of the place of their “habitual residence“, unless they had made a choice of their national law in a disposition by will prior to their death which would therefore prevail over the law of the place of residence.
In fact, the Regulation will apply to any person, of any nationality including of a non EU state, who dies resident in Europe or owns property there.
This means that British citizens, Australians, citizens of the US or South Africa are now able to plan their succession as far as it relates to Europe by making a will stating that they wish their national law to apply on their death. Without making such a choice, the law of the place of residence could apply, and this may lead to a family having to deal unwittingly with the forced heirship rules of the Italian Civil Code, for example, and the clawback of lifetime donations made to one of the heirs to redistribute their share of the inheritance. This is said to be the principal reason why the UK was not willing to participate.
The result of the United Kingdom not participating in the Regulation, however, is that there will contine to be uncertainty for those whose succession may still be affected by the common law rule of “scission”. (Scottish law follows different rules which are not discussed in this article).
By the rule of scission, English law refers questions relating to succession or inheritance, where there is an international element relating to the deceased’s domicile or assets, to sometimes two or more different country’s laws, according to the type of property making up the estate:
– the law which governs the succession to immoveable property or real estate should be the law of the country in which the property is situated, and
– the law which governs moveable property such as bank accounts or shares should be the law of the “domicile” of the deceased on death.
The referral to the law of another country is known as renvoi in the doctrine of private international law. According to the Regulation, if a person has chosen their national law to govern their succession, renvoi will no longer be made from that national law.
This means that British nationals who choose English law to govern their succession will be able to plan to leave their entire estate to a common-law partner or charity, or to their spouse with no provision for their children, in the knowledge that any property situated in Europe can be validly passed on in this way and there will no longer be a risk of a local law of forced heirsip overruling their choice.
However, a British national who does not make a choice of English law in a will, and dies resident in the UK, will find that the rule of scission will apply to their overseas property as before.
Transitional provisions on prior wills
It is not necessary to make a new will if a choice of English law has not been made in a will signed before August 2015. The Regulations provide that a choice of law will be implied, if a person has made a will according to the law of their nationality.
Many British expats may therefore find that the WH Smith will they made 10 years ago is sufficient to show an implication they had intended English law to apply to their succession, their freedom of disposition will be upheld, and no challenge could be made to their decision to leave all their property in Spain, Sweden, Italy and Germany on trust to be sold and the proceeds given to their favourite charity.
They are of course advised to take specialist legal advice on this point!
In the case of the UK and Ireland this is confirmed by paragraph (82) of the Recitals:
“In accordance with Articles 1 and 2 of Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, those Member States are not taking part in the adoption of this Regulation and are not bound by it or subject to its application. This is, however, without prejudice to the possibility for the United Kingdom and Ireland of notifying their intention of accepting this Regulation after its adoption in accordance with Article 4 of the said Protocol.”
