New EU inheritance law and what it means for your Will

New rules were introduced last summer which were aimed to ease succession across the EU by giving individuals the chance to opt either for the law of the country of their nationality or their last habitual residence to be applicable to their inheritance across Europe. The default position will mean the law of the country where someone is a habitual resident when they die governs succession to their estate as a whole.

The rules allow people to opt out of ‘forced heirship’ rules that apply in a number of EU countries and govern how assets are passed on within a family after death. As an example previously a woman in the UK with a property in France would have been obliged to leave it to her husband and children under French forced heirship rules. Now under the new succession rule she could instead choose to apply English law to the property, which would allow her to leave the house to her brother instead. That is all very well but the problem is that this could cause problems in France which does not have experience in dealing with executors who are named to deal with an estate. Furthermore it should be noted that the local tax laws will still apply to the estate however it devolves. This may lead to more IHT being payable so in France for example the top rate can be 60% with no reliefs if the estate passes to a beneficiary who is not the surviving spouse or child of the deceased.

The UK has opted out of the new rules, but the changes will still have an impact on UK citizens with properties or other assets in the EU. It should be noted that where a person sets up an English Will it means that they are automatically choosing English Law. Conflicts may still arise in the future and the situation will not always be clear given that the UK has opted out of the new rules. It is probably still preferable that individuals set up separate Wills to deal with their overseas properties in the country in which the property is situated unless there is very good reason to do otherwise. Proper advice can be given on an individual basis by our in-house solicitor Liz Hooley.