If you have a holiday home in the EU (except for Ireland or Denmark) then these new rules may be of assistance to you.
The position before they came in was that where you have a property (unlike a Bank Account or house contents) in an EU country, then the law of the land where the property is built governs how that property can pass to your beneficiaries. This is a concern in many EU countries as they have strict rules that state that a certain percentage of your estate has to go to specifically designated family members, usually to the children at the expense of your spouse. This contrasts with the English system where, in your Will, you can usually leave your property to whomsoever you want, and there is no obligation to leave it to specific family members.
It is now possible for you to nominate the country whose law is to apply to your estate and govern what happens.
The EU jurisdiction may not only affect who receives your estate when you die, it may also affect who administers your estate. For example, in England the executors named in your Will or your closest family members, if you do not have Will, will deal with the administration. In most EU countries the beneficiaries do this themselves. You want to make sure that you have certainty as to who is going to be involved in sorting things out for you.
If the law of another EU Country is to apply, a secondary impact is that the requirement for prescribed shares to go to your children could affect the Inheritance Tax liability – potentially creating a tax charge where ordinarily one would not exist if your spouse was still alive.
Another aspect to consider is that if you allow the EU law and foreign ‘forced heirship’ rules to apply, the people who benefit under those rules can claim their reserved shares if your Will attempts to override them. If English law applies this may allow claims against your estate by persons that were dependant upon you, including spouses, co-habitees and children if you have failed to make ‘reasonable provision’ for them, but there is no ‘reserved benefit’ to which they are already deemed to be entitled; and the value of their claim (if any), will be governed by established case law under the English system.
Finally, if you have nominated England and Wales as the law to apply, then the Courts of this country will also hear any disputes.
There is some ambiguity as to whether an existing Will can be treated as making a choice of law; our advice is to review your Will and, if appropriate, incorporate a statement in a form of Codicil to make sure that there is no doubt about the jurisdiction that will apply.
If you do own a property in an EU country and you have concerns about this area of law, please contact Paul Loftus.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.