UK expats must review their wills as per the

New EU Succession Rules!

We have received the following letter and EU document from Scott Kennedy of FMA – Astute Financial Management Associates Ltd and have replicated them below for the benefit of our UK expat readers wherever they may be, so they may consider their will arrangements in relation to the new EU regulations shown.

FMA letterhead

UK expats must review their wills as per the New EU Succession Rules!

UK Expats and residents with assets in Europe could become liable for a heavy tax bill on their death as a result of changes in EU cross-border succession rules!

Despite the UK exempting itself from the application of “Brussels IV” on 17 August, those with European ties could be caught by its attempts to simplify succession across the EU by applying the succession rules of the deceased’s country of “habitual residence” at their time of death.

UK Expats and residents with assets in Europe, particularly real estate, should check to see if their will needs to be revised to include a clause indicating that all assets will be subject to the succession rules of their nationality rather than their habitual residence, upon their death.

Initially. it looked like the Brussels IV is not affecting UK residents because the UK has opted out, and if you are a UK person with all your assets in the UK then you are not affected, However, if you are UK Expats must review their wills a UK citizen residing elsewhere in Europe, a UK citizen with property elsewhere in Europe, or an EU citizen residing in the UK, then you are affected by the rules because you have assets or are living in a jurisdiction that is participating.

Brussels IV attempts to unify the UK, Ireland and Malta, which has a common law system and allows testamentary freedom – the individual has complete control over the succession of their assets – with the rest of Europe which operates under civil law, and their forced heirship provisions on death.

So far, 25 member states of the EU have chosen to implement the legislation with just the UK, Ireland and Denmark exempting themselves from it.

Claw-back

One of the UK’s key reasons for opting out of the legislation was the presence of so-called “claw-back provisions” in many civil law codes.

Such claw-back could mean that lifetime gifts made by a UK person over their life which do not marry with civil law requirements could be clawed back upon that person’s death. Claw-back could also affect assets passed to lifetime trusts, structures which are not widely recognised in civil law countries.

Many civil law countries also have matrimonial regimes – either applied by default or choice – which concern the rights and powers of spouses over property in the event of the break-up of a marriage or the death of one spouse.

England and Wales do not have a matrimonial property regime, so in effect marriage does not affect the ownership of property.

Over-complication

The EU has not attained the simplicity of succession across Europe it was hoping for with Brussels IV, therefore this means that the outstanding areas of conflict means there is a great deal still to be clarified, and may have only added to the confusion.

Over the centuries European states have built up vastly different rules around succession, and it was always going to be difficult to try and unify such disparate systems. It will only be when an EU wide regime seeks to accommodate common law that we might arrive at a position of certainty in cross-border succession.

If you would like or require further information or have questions on the above, then please feel free to contact us at the office or drop me an email at scott@astutefma.com

I look forward to hearing from you.

For further information please read the EU document “Inheritance in the EU” by clicking here

Best regards,

Scott

Scott Kennedy Cert PFS

Director

ASTUTE FINANCIAL MANAGEMENT ASSOCIATES LTD

Tel: +9 (0392) 822 3774 / Fax +9 (0392) 822 3775

Tel: +9 (0533) 845 7296

Email: scott@astutefma.com

Email: info@astutefma.com

Website: www.astutefma.com