What is Brussels IV?
Brussels lV is the name by which the EU Succession Regulation (EU/650/2012) is known; the regulation is intended to harmonise succession law across all EU states and thereby make it easier for nationals of EU states to move between member states.
The UK and Ireland elected not to opt into the regulation (although they have reserved the right to do so in the future) and Denmark has opted out. The reason given by the UK Government for electing not to opt in is the fact that the rules would allow lifetime gifts to be clawed back. The consensus was that this would cause uncertainty and would be unacceptable in a jurisdiction such as England and Wales which does not have fixed rules governing to whom you can leave your estate.
When did it come into force?
Brussels IV entered into force on 17 August 2012 and it applies in relation to deaths on or after 17 August 2015.
Why do I need to know about Brussels lV, if the UK has not opted in?
If you have a connection with any of the EU member states or expect to have one in future, Brussels lV may change what happens to your estate when you die. You may need to change your will (including any wills covering assets outside the UK), or make a will if you do not already have one.
Brussels lV will affect you if:
- you have connections with more than one country (for example, you have a property abroad or you are a national of one country but live in another) and
- at least one of the countries concerned is an EU member state where Brussels lV applies (i.e., any member state except for the UK, Ireland or Denmark).
If you have connections with more than one country, you need to know which country's law will govern who inherits your estate when you die. Each country has its own rules to decide which law applies. The interaction of these rules is often complicated and unclear, which can mean that it is uncertain who will inherit your assets situated in different jurisdictions. Brussels lV aims to reduce this uncertainty by introducing one set of rules for the EU member states to which it applies. These rules apply when somebody dies on or after 17 August 2015, but they may change the effect of wills put in place before that date.
Although the Regulation does not apply in the UK, it affects the way that the rules in England and Wales, Scotland and Northern Ireland interact with the rules of the EU member states where it does apply.
What does Brussels lV say?
In the EU countries where Brussels lV applies, the law of the country where you are ‘habitually resident’ when you die will govern succession to your estate as a whole, unless:
- you were manifestly more closely connected with another country when you died; or
- you choose to apply the law of your nationality instead. You can make the choice in a will or codicil. If you have already made a will in accordance with the law of your nationality, you may be treated as having chosen to apply that law even if your will doesn't mention this.
The term ‘habitual residence’ is not defined in Brussels lV but the expression is used elsewhere in EU legislation and it would be reasonable to work on the basis that in order to establish a person's habitual residence, you need to look at all the relevant factors, including, amount of time spent, location of assets and family and social ties.
Countries where Brussels lV does not apply will continue to apply their own rules. Under the English rules, succession to a person's immovable property (broadly speaking, land and buildings) is governed by the law of the country where it is located. Succession to a person's movable property (everything else) is governed by the law of the country where they are domiciled when they die. The concept of domicile is a complex area but for the purposes of this note, it is sufficient to say that you are likely to be domiciled in the country that you consider to be your permanent home. It is worth noting that a person may well not be domiciled in the country in which they are habitually resident.
What steps should I take now?
If Brussels lV will affect you, you should review any existing will to make sure that it will work effectively to pass your estate to your nominated heirs and to ascertain if it is worded in such a way that it is treated as including a choice of law provision.
If you do not have one, you should certainly consider drawing up a will and you should also take advice on whether it would be appropriate to include a choice of law provision in your will. Choosing to apply the law of your nationality will reduce the uncertainty that could arise if you are unsure where you are (or will be) habitually resident or if Brussels lV does not apply in the country in which you are habitually resident (but you have assets in jurisdictions in which Brussels lV does apply).
The content of this article is for general information only. For further information regarding Brussels IV, please contact Catherine Bacon. Law covered as at April 2016.