What happens to property held abroad when you die? - The Impact of brexit
In 21st century society when we are more socially mobile than ever before, it is not uncommon to have some sort of asset in another country. More often than not this will be a property, possibly used for holiday purposes or with a view to being your retirement retreat. Testament to this is the fact that in 2016 there were some 300,000 Brits living in Spain and more than 150,000 setting up home in France. However, with Brexit looming, there are concerns about buying and visiting property abroad. For those that have already bought a property abroad or are pushing ahead with buying their dream in spite of Brexit, questions remain unanswered over what will happen to the property when they die as we will no longer be subject to EU law.
What happens to property held abroad on death?
At present if you pass away your estate should be administered in its entirety by Scottish law. This is because of the ‘Brussels IV’ EU Regulation on Succession that came into force in 2015. This Regulation allowed EU citizens to choose which law should govern their estate where they had assets in an EU member state other than their home state.
The UK did not opt into this regulation to prevent other EU Nationals from using their home state’s succession laws to govern their UK based assets. As a result, the UK holds a special status. This special status protects UK nationals with property abroad by allowing them to choose Scottish law as the law to govern their assets in France, German, Spain etc.
For example, if David’s estate consists of a house and assets in Scotland but also a holiday home in France he could choose for his estate to be subject to Scottish succession rules. As a result, French succession law could not apply to the holiday house and prevent the house being left to who he wished.
What could happen after Brexit?
Prior to the Brussels regulation coming into force, EU nationals found any part of their estate abroad being subjected to International Private Law rules. In practice for David, this would mean that his house and assets in Scotland would be governed by Scots succession law. However, his holiday house in France would be subject to French succession law.
It is entirely possible that this scenario other than creating a lot more paperwork may not actually have caused a problem to David as French succession law allows certain people rights to parts of an estate which may have been in line with David’s wishes. However, at the same time it is also possible that the law of an EU member state prior to the Brussels regulation in cases of succession could have went completely against some British nationals wishes.
Presently, it is unclear just how this situation would be handled post Brexit but given that the UK will not be subject to EU law it is unlikely the protector status given by the Regulation at present would apply. As a result, this would mean the International Private Law rules would apply, as was the case prior to the Brussels regulation. As previously explained this could lead to British Nationals final wishes being somewhat ignored or in doubt. There is also the possibility that by being subject to a member states succession laws, executors will also find themselves subject to the relevant succession taxes of that state which could be considerable.
As negotiations continue in Brussels and around Europe it is hoped a clearer picture will emerge as to how succession laws will work together between Scotland and the new EU. Many will exercise caution given this doubt before investing in property abroad while for others the lure of the sun will be too much and they will take what comes post Brexit.
Contact our professional Executry & Probate Solicitors Glasgow, Edinburgh, Stirling, Falkirk
Here at Wilson and Fish our team are following the negotiations with interest. We are ready to advise on how best to organise your estate in Scotland and abroad to ensure your wishes are respected and financial liabilities are minimal. Our team working hand in hand with our colleagues abroad can advise on the what the law of succession in countries such as Spain, France etc. could mean for any assets you have there.