As the festive period approaches the collective minds of the Private Client department here at Hanne & Co. turned to that age old question – whether Brussel Sprouts have a deserving place on the dinner table. Well that then got us thinking about another Belgian speciality – Brussels IV.
Well, now we have your attention, we can tell you that Brussels IV isn’t a vegetable but an EU regulation (No. 650/2012) that impacts the way people living in Member states of the EU can dispose of their assets upon their passing. Who does this impact upon? Think of an English person working abroad on a 3 year contract in Germany, but with assets potentially in either or both England and Germany. Or think of an English person who may own a holiday home in Spain or a ski chalet in France, or for that matter your German neighbour in London who also owns a property in Germany. Do they need multiple Wills? Will one do? Which language or jurisdiction should it be in?
Regardless of Brexit – if you live or own assets in an EU Member State that signed up to this regulation (all but Ireland, the UK and Denmark) then this law may affect you.
Okay, so this law may affect you – but what does it actually do? Well let’s look at the situation before Brussels IV came in to being. Under international law a person’s estate is administered in the country in which they were ‘domiciled’ at the date of their death. Further under English law we have complete testamentary freedom, meaning we can leave our Estate to whomever we want (think the Donkey Sanctuary or the friendly neighbour who was always so nice). There is however a possible exception – if any of your assets were immoveable – i.e. land, and were situated in a country that had what is known as ‘forced rules of heirship’, then if the English Will contradicted the forced rule of heirship, the latter would prevail. E.g. in France the law provides percentages of your estate that must be bequeathed to certain relatives. If an English person wrote a Will leaving their French chalet to a charity, that gift would fail, and the chalet would pass according to French law regardless of the terms of the Will.
One of the difficulties Brussels IV sought to remedy was the fact that ‘domicile’ is not always obvious or easy to ascertain. If your parents were English, and you were born and lived here all your life, and you all have British passports it is more than likely that you are domiciled in England. But what if you then accepted a job in Italy for 2 yrs fixed term contract, subsequently extended that employment term, married an Italian national, had a family there, but retained assets in England. Have you retained your domicile of birth, England? Or have you now taken on a domicile of choice, Italy? The answer may be in a simple intention to return one day to England, but if you died would anyone know that intention? Hence it is not a simple concept.
Therefore since 17th August 2015, when Brussels IV came into force, all those countries that signed up have agreed that an individual’s estate is administered under the law of the country in which they are ‘habitually resident’. This is far more obvious than domicile as it is a simple as it sounds. Further the individual is allowed to elect that their estate is administered in an alternative country, to the one in which they are currently habitually resident, as long as they have strong ties to that country. So in the example above the same English person who moved to Italy could still elect to have their estate administered under English law, including all their assets in Italy passing under the terms of their English Will, despite Italian forced rules of heirship. This is a huge shift in the way people can dispose of their property.
Another unifying achievement from Brussels IV is the creation of a European Certificate of Succession. This enables all those signatory countries to recognise another country’s Grant of Representation (the document that allows a Personal Representative to deal with the deceased’s affairs). In practical terms it should mean a lot less hurdles and obstacles to jump through for that best friend of yours who you appointed as Executor – it is still a big responsibility but will hopefully mean they will be able to deal with your ski chalet or Swedish lodge that little easier than before.
However the Brussels IV has not taken into account is that even if an asset passes under the law of another country, the actual procedures to sell or transfer that asset will still be within the jurisdiction of the country in which that land is situate. The reality is that it may take a little time before financial institutions of the various member states actually recognise and accept a European Certificate of Succession so as to process the sale or transfer of an asset, rather than insist on their own national documentation.
There is also one BIG fly in the ointment to all of this – Brussels IV does NOT apply to the tax systems of the signatory countries. Therefore, whilst you may be content in the knowledge that your last wishes will be respected, don’t rest on your laurels – you may have inadvertently caused a tax liability that would not have occurred had you followed the forced rules of heirship to a particular asset. That’s why we always advise our clients they need to understand the tax implications of any bequests they make under a Will, in any country in which they have assets . This may sometimes mean having more than one Will remains a good option, but everyone’s circumstances will be different.
Brussel sprouts and Christmas dinner? At least that decision can be made without expert advice.
Wills, Probate & Trusts Department- Hanne & Co