20th April 2017
Brexit, Brussels IV and Holiday Homes
Prior to August 2015, there was no unified system of succession law for those who were domiciled and habitually resident in England and Wales but who owned assets, such as a holiday home, elsewhere in Europe. This caused added expense when dealing with assets in Europe, and it was difficult to predict whether the intended beneficiary would inherit in line with the Testator’s intentions.
The best legal advice at the time was for a Testator to have an English Will dealing with assets in the United Kingdom and a second Will drafted in the jurisdiction in which the foreign assets were located to deal with the foreign assets and not to disrupt the English Will, or any other Wills which may have been created worldwide.
During August 2015, the Brussels IV succession regulation was formally adopted by the European Union. The United Kingdom, together with Ireland and Denmark, opted out of Brussels IV from the start. That said, it did mean that British citizens owning assets elsewhere in the European Union could include various English law clauses in their Wills. An English Will could, for instance, say that English law was to apply to both their English assets and assets in France, specifically excluding French succession law from applying. This may lead to a speeding up of the administration of cross-border estates and may, in many cases, a reduction in costs, although there will still be a need to apply for an English Grant of Probate and deal with the asset
in the European jurisdiction in a similar way to a vesting assent of English property in the United Kingdom at the Land Registry.
Brussels IV said nothing about taxation regimes and it would be a mistake to think that there was any simplification of those; many English law concepts simply do not travel, such as spousal relief for death duties elsewhere or a unified Nil Rate Band allowance.
There has been a lot of debate post Brexit as to whether or not Brexit has had any impact upon the Brussels IV Regulation and in particular to those English domiciled individuals owning assets in post-Brexit Europe. However, given that the UK was never a member state for the purposes of Brussels IV but always a third state, where a British citizen elects for English law to be the applicable law, it will still sit with either the country of habitual residence of the Testator (England if the Testator is physically resident there) or another member state which is connected to the Estate of the deceased Testator to deal with the assets in the European Union.
The complex and uncertain legal concept of a renvoi (international conflict of law) will not apply provided there is an election for the law of the Testator’s nationality to apply as the applicable law i.e English law and you have English nationality. For those who are internationally mobile, Brussels IV may not necessarily offer a solution. But for many who are relatively settled, and have an English Will incorporating Brussels IV appropriate wording, this will be a useful update to their succession planning. That having been said, post-Brexit, one wonders whether it will be particularly easy to travel to and from the holiday home without the freedoms of movement or to finance the purchase, running costs and, potentially, the repatriation of
funds from the European Union to a post-Brexit United Kingdom.