I have been asked whether the 2015 European Directive which allows habitual residence to govern the inheritance law Council Regulation 650-12 applies to the UK. Does anyone know off the top of their head if it does?
Any guidance is much appreciated.
Harold Bell & Co
No, it doesn’t - in the sense that it is not applicable in the UK (or Ireland).
It can however be used to apply UK [insert relevant part] succession law to assets located in an EU country which are subject to the Regulation (everybody except the UK, Ireland and Denmark).
I have a bad feeling that my second paragraph may be contentious - there are issues over whether the UK is a “Third State” for the purposes of the Regulation (which may be resolved anyway in March 2019) and whether English succession law can ever be applied to assets outside of the jurisdiction. Even writing this may be contentious.
Osborne Clarke LLP
Hello Andrew, I also believe it is most widely believed the UK is a third state for the purpose of this Regulation, so don’t worry about being contentious! I think it was simply not made clear in the final draft of the Regulation once it was known the UK was opting out, just in case they opted in one day… But is certainly is not confirmed until the ECJ rules on it …
Oliver & Partners, Rome
It is in any event an EU Regulation, not a directive: Regulation (EU) n° 650/2012.
If property subject to the succession is within the EU, then the Regulation will require that the succession to that property be dealt with under the law of the habitual residence of the deceased, unless as testator they have in one way or another made an option for the law of their nationality to apply.
There is considerable misunderstanding of the scope of the unitary concept deployed by the Regulation, and great care has to be taken here to avoid an arbitrary renvoi by foreign lawyers, believing themselves to be aware of the scope of renvoi under English law; The initial work done on the Regulation showed that there is no common ground for a pan European definition of renvoi within the Regulation, which is why it is left to the applicable law, be it EU or Third country to determine. It is a bit like the concept of domicile in Brussels I, which has one meaning in the remainder of Europe and another here.
At the risk of a major digression, there are benefits in the new system for British testators.
You cannot rely on a foreign lawyer’s opinion on that point even with a British Law degree.
For example, English law of itself does not impose a renvoi on the transfer of foreign immovables so as to require the interpositionning of a representative. The 1925 consolidating legislation which imposes that only applies to land situated in England and Wales, and the old principle of direct seisin as to immovables abroad should be applied under article 23.2.(e) which therefore means that English law will operate to transfer directly to the heirs or,legatees without an executor. A welcome common law blast from our Norman past
That is clearly stated by Dicey and by Megarry after the 1897 Real Representatives legislation. .
My rather basic understanding is that the Succession Regulation does not apply to the UK.
However, an English will can include a choice of law clause which for an English national would be English law which would then have universal application (Art 20). This would mean that for succession purposes the Member States would then apply English internal law (no renvoi ?; Art 34(2)).
Whether the UK leaves the EU after Brexit (or not) should not affect the choice of law clause as to make such an election does not require the UK to be a Member State.
The consequences of the Regulation would seem to be that an English national (UK domiciliary) who is habitually resident in a Member State or has property located in a Member State ought to include an English choice of law clause in their will. This will then ensure the application of English law.
Presumably, to the extent that land is located in a Member State English law would then apply to the succession (as intended by the testator) subject only to any conflicting issues under the law of the territory where the land is situated (eg so-called “foreign heirship” provisions) in which case the law of the latter would apply.
Should existing wills be reviewed/rewritten so as to ensure a choice of law clause is included for an English national residing in or with property in a Member State (or can reliance be placed on the transitional provisions; Art 83)?
I have been advising British clients to include an express choice of law clause for many years in view of the entry into force of the EU succession regulation to avoid any doubt (and also possible renvoi to Italian law which is central to most of my cross-border private client work). My view is that it would be sensible to review and if necessary attach a codicil in the event that a client may take up residence in a EU member state in the future or has assets in a member state. There is no ECJ caselaw yet as far as I know on whether a choice of law is made by a pre-2015 English form will under the transitional provisions.
Oliver & Partners, Rome
There are two senses to the term “apply”. Regulation (EU) n° 650/2012 does not apply within the UK, as the UK opted out, but it will apply to a UK resident where they have assets in Europe.
However, care should be taken in that were it to be shown that a UK law did not apply to the whole of the worldwide succession, then there could be cause for concern. The Regulation adopts a recent shift in Hague Convention international policy from scissionnist rules to a totally unitary succession ideal.
So, yes wills should be reviewed, as Charlotte recommends, and, whilst it may be possible in extremis to attempt to assert a reference to the laws of nationality from the terms of an existing will, say one asserting domicile, that should not be relied upon as a solution.
I should point out here that there are many continental lawyers who will attempt to assert that the entire succession will be governed by the laws of the habitual residence, wherever that may be, in an attempt to assert that their law of the situation of immovables is to be used, asserting that the renvoi article 34 requires that. It doesn’t. It simply says that where the laws of the third state, here the UK or its component jurisdictions include a renvoi that that renvoi is to be given effect to only to preserve the foreign succession law. I have mentioned that under a strict reading of articles 20-23, and specifically article 23.2(e), as English law does not in fact require a renvoi and an appointment of a foreign executor to convey foreign immovables to the heirs or legatees (both Dicey and Megarry confirm that you don’t in earlier editions) there may be ways through that issue. I have already steered three Paris Flats through a conveyance on death using that legal procedure in collaboration with a notary. Incidentally, the wills concerned opted for an English domicile over the Estate i.e. succession outside France
Hence it is best to review the wills where there is a foreign European element, and avoid will trusts over European property, in the current fiscal context.
It will be interesting to see whether an option for the law of the habitual residence will also be included, so as to exclude renvoi in a revised version, as it had been omitted at an earlier stage in the drafting of the current Regulation. There is pressure to include one.
Perhaps the recent information pamphlet issued by the EU will provide assistance.
However it will provoke as many queries as it resolves, as it is directed mostly to EU individuals.
Note the insistence upon the “jurisdiction” and its taking up by a Member State’s authorities, even over persons who might consider their estates to be outside scope of application of the Regulation, particularly at page 21 where there are assets within the EU, or where the deceased has spent time within the EU prior to their decease, and only changed residence to move outside the EU less than five years prior to death.
Peter, I don’t think the link you’ve given us is correct
Julian Cohen, Solicitor
Thank you Julian
That’ll teach me to use the skewed infinity sign!
I have attempted to re-edit., but have to put the link here