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European Assets | Which laws apply when making a Will?

Wills

Which laws apply if I have property and assets in other EU countries?

EU Succession Regulation 650/2012, better known by its even catchier title “Brussels IV” concerns regulation regarding succession law in most of the EU (except Ireland and Denmark) which came into force on 17th August 2015. In essence, it allows people to choose whether they want the law of the country in which they are resident to apply after their death or the laws of their nationality.

This is important because laws governing inheritance differ substantially across the many countries of the EU. Many will have what is known as “forced heirship” – which means that you are forced to have certain heirs. For example, your husband/wife and children must inherit some part of your Estate. This is not unique to countries on the Continent. In Scotland, forced heirship rules apply to part of the Estate if the deceased died domiciled in Scotland.

Do I need to consult a UK lawyer?

Increasingly we are seeing people who own properties on the Continent make Wills with local lawyers, such as a Spanish lawyer and the Spanish lawyer is using the Brussels IV provisions to apply UK or British Law to the clients’ property in Spain. Eagle-eyed readers will have spotted that I just made reference to “UK or British” law and you are probably thinking “but there’s no such thing” – and you’d be right. Unfortunately, not all our European colleagues are aware that English and Welsh Law is very different to Scottish Law and Northern Irish Law and that (very often) what they should be applying is the Law of England & Wales (or Scottish or Northern Irish Law as the case may be).

Therefore, if you are seeking the advice of a lawyer abroad (which is an excellent idea) then you should point this out. You must also be careful about applying the Law of England & Wales to your assets abroad because the tax situation is very different in most of the Continent to the UK. In the UK everyone receives a Nil Rate Band for Inheritance Tax purposes of £325,000. This amount of money will be free of tax no matter where it goes. Money which is left to charity or to spouses is exempt from Inheritance Tax too. Whereas on the Continent the amount of tax that has to be paid very often depends upon who is inheriting (i.e. their relationship to you, e.g. child or brother or step-child) and how much they are inheriting. So, for example, a child may receive a different tax-free allowance to a stepchild. Where this is the case, leaving £200,000 to your child and stepchild will result in radically different outcomes for each of the children. It is important therefore to take the advice of a local lawyer about the tax consequences of what you are doing as well as whether what you are doing is actually possible.

Moreover, most people do not fully understand that by applying the Law of England and Wales to their Estate in Spain (for example) they are applying the whole law. This includes things like the Inheritance (Provision for Family and Dependants Act) 1975, Proprietary Estoppel the doctrine of Mutual Wills etc. If you have never heard of these things, your lawyer in Spain, France, Germany, Portugal or Italy probably hasn’t either.

Whilst we have yet to see a case where claims are made against a foreign Will (such as a Spanish Will) using English legal concepts, it is likely to happen at some point and it is probably best that you and your Will are not the first test case where this happens, so it is probably best to also involve a lawyer based here to check what you are doing and to ensure that any Will made over there does not accidentally cover your property over here (which could have bad tax consequences or not adhere to your wishes) or revoke your UK Will altogether.

In a nutshell, even if you’re planning on just using a Spanish lawyer to cover your property in Spain, it would be best to speak to an English Lawyer at the same time.

Here at Hegarty Solicitors Greg Baker or Martin Banwell would be pleased to help with queries.

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