EU Succession Regulation

 In Wills

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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. However, on 15 December 2009 Jack Straw, as Minister of Justice, announced that the UK government had chosen to elect to opt out of the Regulation – it could opt-in later in the negotiations.

Since then the Lechner Report has made suggested amendments to the draft and a vote in the Legal Affairs Committee of the European Parliament on 1 March 2012 passed the report.

The proposals in a nutshell are:

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  • There should be a single competent authority to apply a single law to one and the same succession, irrespective of where property is located within the EU
  • The testator should have a choice of applicable law
  • There would be an 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.

The European Council has been in negotiation throughout with those countries which do not have the Civil Code tradition (the UK, Republic of Ireland, Malta and Cyprus) in an effort to iron out many practical problems, particularly with the operation of claw back – the wording of Art.19 (2)(j) of the Regulation 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 under forced heirship systems.

Many countries with forced heirship systems allow assets gifted away by the parents during lifetime 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 when it was first issued. 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.

However, the UK and Ireland are still in negotiation over the issues of claw back and also the administration of the estate (primarily the rule here that a Grant will not be issued without IHT, if due, being paid) but it may yet prove to be too difficult to overcome these issues so the Government will not be able to opt in.

It seems likely that the European Parliament will adopt the Regulation without the UK & Ireland. If so it will probably come into force in 2015. How practitioners will be expected to deal with its ramifications here for clients is as yet unclear.

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