The unexpected result in the Brexit Referendum has led to much
uncertainty. How long will our European friends and colleagues be
able to remain in the UK? Will the free market now attract tariffs?
What will constitute a 'red line' in the forthcoming exit
negotiations? Free movement of people or free movement of capital?
Or both? Who is going to be leading the government in October? Will
there be a snap general election? Confusion and perplexity abound.
However, in one important area, Brexit has brought some clarity,
and that is as regards who can inherit your EU assets if you are a
UK citizen (by birth or naturalisation).
Last year on 17 August, there was a revolution in EU inheritance
laws when the EU Succession Regulation (also known as Brussels IV)
came into effect. The Regulation aims to harmonise the approach
across EU states when deciding which country's law governs the
succession to EU assets on death.
Previously, if an individual died with assets overseas and they
were a national of, resident in, or domiciled in a different
country, an inevitable conflict of law arose as competing states
all sought to apply their own local rules. With 'forced
heirship' rules in much of Europe (which sees family members
inheriting fixed portions of an estate irrespective of what a Will
might say) UK nationals used to total freedom of testamentary
disposition often did not have control over who would inherit their
EU holiday homes.
Although the UK, Ireland and Denmark did not opt into the
regulation, the general rule is that EU assets (outside the UK,
Ireland and Denmark) now pass in accordance with the law of the
country in which the deceased was last habitually resident.
Logically you might therefore think that if you are resident in the
UK, and have no plans to move, that UK succession law will apply to
all of your EU assets on your death. However, illogically this is
Although UK law would be the starting point, in the UK, real
estate should pass under the laws of where it is situated and other
moveable assets (such as art, cash deposits and investments) in
accordance with the domicile of the deceased. If the UK courts do
not consider that they have jurisdiction, they would refer the
issue to the relevant EU court and allow them to apply their own
laws, which may include forced heirship. Prior to Brexit, there was
some doubt as to whether the EU courts would accept such a
referral, but following Brexit and assuming the UK formally leaves
the EU, the position is now clear: they will.
However this does not need to be bad news.
The Regulation allows affected individuals to make an election
for the law of their nationality to apply to all of their assets.
An election will override the law of any participating EU state. It
will also prevent the courts of an EU state accepting a referral
from the UK.
So what does this mean in practice?
We recommend that UK citizens with assets in the EU, or those
who are living in an EU state with assets in that state and the UK,
review their Wills and consider making an election for UK law to
apply to their estates. Without one, following Brexit and the
UK's withdrawal from the EU, British citizens with holiday
homes and other property in the EU may not be able to control who
inherits their assets. It doesn't have to be that way, you can
take back control and make the election.
The well documented case of Heather Ilott and her attempt to overturn her Mother's will appears to have come to an end with the Supreme Court ruling that, whilst she may have be granted some money from her Mother's estate, it is a far smaller sum than the Court of Appeal awarded.
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