The end of conflict in Europe?
An update on the Draft EU Regulation on Succession
The origins of a European instrument to govern mutual recognition of succession across the EU first appeared in 1998. There followed an extensive Green Paper which was issued in March 2005.
On 14 October 2009 the European Commission issued a long awaited draft Regulation. This can be found at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0154:FIN:EN:PDF#page=2.
However, on 15 December 2009 Jack Straw, as Minister of Justice, announced that the UK government has chosen to elect to opt out of the Regulation – it can opt-in later in the negotiations.
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Proposals in a nutshell
- Single competent authority to apply a single law to one and the same succession, irrespective of where property is located
- Choice of applicable law
- Harmonised European Certificate of Succession
This could mean that Mrs England could choose to have the whole of her EU located assets dealt with under English law if we opt in but if we opt out and it proceeds we may be preparing English Wills for Mr Germany who is habitually resident here and wishes to choose English law as the law of the succession to all his estate.
There are many practical problems to iron out and it may prove to be too difficult but this Regulation makes a start albeit largely based on the Civil Code countries view of the world.
Administration of Estates
Scope – Article 1
The Regulation would apply to all member states apart from Denmark; the UK and Ireland have an opt out. The Regulation does not cover (amongst others):
- The status of natural persons, family relationships and other relationships which are similar in effect
- The legal capacity of natural persons
- The disappearance, absence & presumed death of a natural person
- Questions regarding matrimonial property regimes
- The constitution, functioning and dissolving of trusts
Definitions – Article 2
“Succession to the estates of deceased persons”: all forms of transfer of property as a result of death, be it voluntary transfer, in accordance with a Will or an agreement as to succession, or a legal transfer of property as a result of death.
“Agreement as to succession”: an agreement which confers, modifies or withdraws, with or without consideration, rights to the future succession of one or more persons who are party to the agreement.
“Joint Wills”: Will drawn up by 2 or more persons in the same instrument for the benefit of a 3rd party and/or on the basis of a reciprocal and mutual disposition.
“Authentic instrument”: an instrument which has been formally drawn up or registered as an authentic instrument and the authenticity of which:
- Relates to the signing and content of the authentic instrument; and
- Has been established by a public authority or other authority empowered for that purpose by the member state in which it originates
“European Certificate of Succession” (ECS): the certificate issued by the competent court pursuant to Chapter VI (Articles 36 – 44 on the ECS) of the Regulation
The Regulation states that the provisions apply to all courts of the Member State on whose territory the deceased had his habitual residence at the time of his death. The Government feels rightly that this is not sensible. Professional bodies think the jurisdiction should follow the applicable law chosen by the deceased.
European Certificate of Succession – Arts. 36 – 44
- ECS will be proof of the capacity of heir or legatee and of the powers of executors of Wills or third party administrators
- It will be issued by the competent authority in accordance with the law applicable to the succession
- ECS will be recognised automatically in all member states
- The contents will be presumed accurate & anyone relying on it shall be released from liability unless they know its contents are not accurate
- Use of the ECS will not be obligatory & not be a substitute for internal procedures
- As currently envisaged the style & content is at odds with common law systems and the professional bodies have expressed concern about the ability of an issuing office to verify the legal matters sufficiently to be able to produce one – there is therefore a worry over fraud
Applicable Law – Arts 16 – 28
The general rule under the Regulation is that the law applicable to the succession as a whole shall be that of the State in which the deceased had their habitual residence at the time of their death. This is the default position in the absence of any choice being made.
Art 17 says that a person may choose as the law to govern the succession as a whole the law of the state whose nationality they possess. This means that a French national habitually resident in Winchester can choose French law to apply to their whole estate and if they do not make a choice then English law will apply if they remain habitually resident in Winchester until the date of their death.
The professional bodies feel it would have been better to widen this freedom of choice in order to plan better. The suggestion is that the testator should be able to choose as his applicable law the place in which the testator has his habitual residence at the time of him making the choice – something which currently applies in relation to inheritance contracts and under the Hague Convention on the Validity of Wills.
Perhaps the most controversial aspect of the Regulation is the wording of Art.19 (2)(j) which says that the law shall govern any obligation to restore or account for gifts and the taking of them into account when determining the shares of heirs.
Many countries with forced heirship systems allow assets gifted away by the parents during life to be taken back by the ‘forced heirs’ from the recipients to prevent circumvention of the forced heirship rules. This has severe adverse consequences in a country like the UK which is primarily why the Government has chosen to opt out of the Regulation at present as this rule could not be allowed to apply here.
The Daily Mail and the Charity Sector made strenuous representations rejecting this Regulation. The Mail suggested that a British home that was once owned by someone with relatives in another EU country could in some circumstances be confiscated by order of a court in that country because of clawback. This would make buying and selling a property in the UK a risky business – and result in extra insurance costs to protect against such a problem.
Similarly, all donations to charity made during lifetime might be overridden on death because of the clawback provisions.
Register of Wills
In March 2005 the European Commission issued the Green Paper on Succession & Wills in which it posed the question of whether a register of Wills in all Member States should be created. In the UK we have not brought in the relevant provisions of the Administration of Justice Act 1982 which were designed to give effect to the Basel Convention on the Establishment of a Scheme of Registration of Wills 1972.
Much has been said about the creation of a Wills Register in the UK. The Ministry of Justice in the UK has said it has no plans to extend the Principal Registry system of depositing Wills nor to set up a compulsory system however it supports voluntary systems.
Certainty has created such a system which is finding favour amongst part of the profession whilst seemingly upsetting the rest. It is Basel compliant.
The European Parliament in approving the Green Paper initiative and calling for an exhaustive Regulation left out the register from its list of issues which it wanted the Regulation to cover. The EP said it ‘hopes that eventually a European network of national registers of Wills will be set up by linking up existing national registers to simplify the task of finding and ascertaining the content of a deceased person’s Will’. The question of registration of a Will was not included in the Regulation.
- The Regulation has made a good start at trying to tackle a difficult and complex problem
- The UK Government has opted out for now but are going to take full part in the negotiations and may yet opt-in to the final version. This is because it welcomes the ability to apply uniform rules and unified choice of applicable law irrespective of different types of assets but is rightly unhappy about the ‘clawback’ laws in other EU countries which the UK courts would be forced to recognise if the Regulation became part of UK law.Also, using “habitual residence” in isolation as a connecting factor could mean that the relatives of anyone who lived abroad for a relatively short period of time and then died there, would find their estate was subject to a law with which they had no real connection. That could lead to unforeseen and unfair outcomes.
- UK lawyers must keep abreast of progress
© Gill Steel, LawSkills Ltd. 2010
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