On 17th August 2015, the full text of Regulation (EU) No 650/2012 of the European Parliament and of the Council (often referred to simply as the ‘Succession Regulation’ and also commonly known as ‘Brussels IV’), entered into force. Although the Regulation was approved back in 2012, only a few of its articles were in force until now.
This Regulation changes the way in which EU Member States (except those who opted out of the Regulation) determine which rules they need to apply to the distribution of an estate when an individual dies having links to different countries.
The UK, Ireland and Denmark opted out of the Regulation and are therefore not bound to apply its provisions, which means their courts will continue applying their respective domestic rules as they applied before the entry into force of the Regulation.
One of the most important provisions of the Regulation is Article 21, which helps determine the law of which country should be applied to an estate when the deceased had connections with different countries (e.g. when the deceased owned property in more than one country). The general rule is that, for deaths occurring on or after 17th August 2015, the law applicable to the deceased’s estate will be the law of the place where the deceased had his or her habitual residence.
One of the main exceptions to that rule is provided by Article 22, which allows individuals to make a choice of law by expressing in their will that they choose the law of their nationality to apply to the estate, instead of the law of their habitual residence. Only the law of the testator’s nationality can be chosen to apply instead of the law of his habitual residence.
Although the rules apply only to deaths from 17th August 2015, the Regulation contains a provision recognising a choice of law made in favour of the law of the deceased’s nationality even if it was made in a will executed before the entry into force of the Regulation. Since the text of the Regulation was approved, and especially in recent months, some individuals making wills within the European Union have included a choice of law in their will stating a preference for the law of their nationality.
It is important to note that the applicable law determined by the Regulation must be applied by the courts of the States in which the Regulation applies, regardless of whether or not it is the law of a Member State. For instance, if an individual dies without having left a will, leaving assets in France but being habitually resident in Brazil, the French courts would need to look at Brazilian law to find the answers as to how the estate should be dealt with (although Brazilian law could potentially refer the matter back to the law of France or another EU Member State).
There is a degree of uncertainty in respect of some of the provisions in the Regulation. For example, it is not entirely clear whether or not the expression ‘Member State’, when used in the text of the Regulation, includes the three EU Member States who have opted-out of this particular Regulation. Different experts have different views on this and in cases where, for instance, a British national dies being habitually resident in Spain, the outcome could be different depending on the view taken.
The Regulation also allows States to use the so-called ‘public policy’ exception, which also creates some uncertainty as to how the courts will deal with certain situations.
In summary, this new Regulation is a step towards the harmonization of succession law within the European Union, but we will all have to wait for cases to reach the courts before some of the complex questions start getting more definitive answers and we see how the Regulation operates in practice.
The full text of the Regulation can be accessed by clicking here.