The fact that the UK may prefer to do somethings a little differently from our continental cousins is such a political hot-potato that this news will surprise no one.
From a financial planning perspective, one our UK traditions which is at odds from most European Union member countries is our laissez-faire attitude to what we can and can’t do in our wills.
“What?” you may ask. Simply, the right of a citizen to pass their estate to whomever (or whatever ie Church, Charity etc) is seen as a right owned by our society rather than a legal privilege which may be withdrawn on the say-so of our political leaders.
What most UK citizens don’t realise is that in the majority of European states there are very strict succession laws which dictate who may or may not benefit from an individual’s estate. Often these succession laws are so prescriptive that the hierarchy of whom may benefit and how much they may benefit from is legally prescribed.
The situation became a little more complex last month (Aug 15) with the introduction of the European Succession Regulations (Brussels IV Regulations) which muddy the water by dictating that the succession rules which will apply on death will be those of the deceased’s “habitual state”. Given this inherent ambiguity, our Danish and Irish friends have joined us in opting out of the adoption of these new regulations.
Previously a UK citizen who held assets (property, cash, investments) in another European Union member state would, on their death, have those foreign assets subject to the succession laws that prevail in the state in which the assets are held. Simply: foreign assets = foreign succession law.
Now that the new regulations have been implemented, British citizens with foreign European assets can benefit from a ‘choice of law’. Simply put do you want your Parisian pied-a-terre being subject to French or English succession law? Or do you want your Andalusian finca being subject to Spanish or English succession law? Do you understand the differences?
If your will is not updated to include a clear choice for the national law which is to be applied on your death you risk your beneficiaries being subject to potentially far less favourable foreign laws.
Paul Corner is a Chartered Financial Planner, award-winning university lecturer, adviser to the DWP’s Pensions Advisory Service and financial planning member of the ‘Resolution’ the Solicitor’s Family Law Association.Tax treatment and laws related to personal finances change on a regular basis. Any investments or financial products referred to are not endorsed, nor recommended. Discussion points raised in blog articles should not be acted upon without professional advice. E & O.E.
© Lovesaving.info All Rights Reserved