Are you a UK Expat living in Spain? Who will inherit your property and assets?

by Sandy Paterson

Are you a UK Expat living in Spain? Who will inherit your property and assets?

Are you a UK Expat with property in the EU? Have you considered the impact of Brussels IV which comes into effect today (Monday 17th August)?

What is Brussels IV?

These new European Succession rules have been put in place so a choice can be made via a Will allowing an individual to apply their own national laws to the succession of assets in other EU states.

The Background

In England and Wales an individual may leave whichever property and assets to whomever they choose in whatever proportion they choose is the norm and is well known to the majority of people.

In the rest of Europe no such freedom exists. In fact there are rules in place which force an individual to distribute their estate in often very draconian ways (Spain for one). Add to this the complication that these forced situations differ across the EU and in Spain differ from one Autonomous Community to the other and clearly there is a problem from the EU’s perspective and a potential minefield from an individual’s point of view.

As from 17th August 2015

Where an individual has their “habitual residence” at the point of death will determine which law is applicable to the distribution of the estate. This can be side-stepped if it can be proven that the deceased was clearly more associated with another EU member state. This will need to be done on a case by case basis. Or, the deceased individual elected for their own national law to apply via their Will.

A European Certificate of Succession will be provided to demonstrate that beneficiaries are the legitimate heirs or administrators of the Will. Allowing cross-border administration of the Will.

There is a clear Will Planning opportunity created by these new rules and the possibility of electing one’s own national law if this proves to be more effective from an Estate Planning perspective.

The EU rules are binding on all 27 EU member states, except for Denmark, the UK and Ireland.

The UK opted out for a number of reasons which we will not go into here but it is still an important consideration for EU nationals (from outside the UK) living in the UK, and for UK nationals with property or assets elsewhere in the EU.

Example

UK Expat living in Mallorca

If the individual has not made an election in their will for their own national law to apply then local Spanish & supplementary Autonomous Community (Balearics) laws will be applied to the distribution of their estate on death, with all of the potential problems of forced heirship this may cause. In simple terms your estate may not go to the people you intended it to go to.

You may of course be perfectly happy for the Spanish / Balearic laws to apply as this is how you wish your estate to be distributed in any case. If this is not the case then read on.

What to do?

As always with financial matters, particularly where legislative changes have come to bear, it is vital to seek professional, Independent Financial Advice combined with Legal Advice in order to ensure the planning opportunities are maximised.

Get in touch to discuss the problems and opportunities these changes have created.