The EU Succession Regulation (No. 650/2012), also known as Brussels IV, came into effect on 17 August 2015. Its ultimate aim is to simplify cross-border successions by having one single succession law apply across the EU (excluding Ireland and Denmark, which did not opt in). Whilst the UK is no longer a Member State, the Regulation still has ramifications on UK estates with cross-border elements connected to the participating States.

As we celebrate its 10th anniversary, it is timely to assess its impact and consider any areas for improvement.

Scope of the EU succession regulation

The Regulation, as the name suggests, applies to all forms of transfers on death under a disposition of property upon death (e.g., a Will or any other dispositions as to succession) or through intestate succession. Matrimonial property regimes, lifetime gifts, and the creation, administration, and dissolution of trusts are excluded from the Regulation.

These excluded domains can be useful mechanisms to consider as part of an individual’s estate planning strategy, which is why the line between succession and excluded matters can sometimes be blurred.

The CJEU held, for instance, that a German matrimonial property regime was to be regarded as a succession matter, as it granted an additional right to the surviving spouse on the first death. By analogy, the French marriage regime of universal community with an attribution clause to the surviving spouse also postpones the children’s inheritance entitlement until the second death. The impact of a change of marriage regime, therefore, requires careful consideration to mitigate the risk of conflict or contradiction with the applicable law of succession as determined under the EU Succession Regulation.

Taxation matters are also excluded; a choice of English law as the law of the succession under Brussels IV will have no impact on the determination of an individual’s tax domicile, and a different set of conflict of law rules applies to such matters.

Habitual residence

The notion of habitual residence is central both in terms of applicable law of succession and jurisdiction. By default, the law of succession of the country where the deceased had his habitual residence at the time of death will prevail.

The Regulation does not contain an express definition; instead, an overall assessment of the deceased’s life at the time of death and during the years preceding it is to be made. A multitude of criteria are provided for guidance, which should reveal ‘a close and stable connection’ with the country in question.

Whilst the last habitual residence can sometimes be very clear, there are other instances in which two or more States could qualify under the habitual residence test. For example, where an individual had moved to a country for work but had intended to return and kept most of his assets in another country, or where an individual dies within a short period of time following a permanent move to another country. Bitter disputes between the deceased’s beneficiaries and the family members can arise, especially where the succession laws of the ‘competing’ States differ to such an extent that their application would result in an entirely different outcome.

Furthermore, the habitual residence can only be fixed once the individual has died, which leads to uncertainty and makes succession planning difficult. It is perhaps regrettable that the Regulation does not allow individuals to expressly choose the law of the State in which they are habitually resident.

Choice of law

Under the Regulation, individuals can nonetheless opt for the law of the country of their nationality (or one of them if the individual has more than one nationality) to govern the whole of their succession. It can be the nationality held at the time the choice of law (Will) is made or at the time of death, although it would be unwise to make a Will with a choice of a national law in expectation of a future naturalisation.

English law as the law of succession

A British citizen most closely connected to England can therefore make a Will and opt for the law of England & Wales to govern the whole of their succession, including their French estate.

English law then takes precedence over French law and its forced heirship rules, although this is subject to a potential claim under Article 913 of the French Civil Code, which was amended in 2021. This law applies to all successions where the deceased or one or more of their children either hold an EU nationality (including a dual UK / EU nationality) or are resident in an EU country, and where the foreign succession law that applies does not grant similar protection to the ‘reserved heirs’ as French law does.

Under this provision, the reserved heirs (e.g., the children and their issue) can seek redress in the form of financial compensation corresponding to the value of the share they would have been entitled to inherit under French law. Whilst many expect that this law will be challenged as it is contrary to EU law, it remains a difficult area to navigate for the British community living in France and their advisers.

Choice of law and testator’s intention

The choice of law should be expressed in a Will or any other disposition of property upon death, although it can also be inferred from the provisions of that Will.

Thus, reference to trustees or any other common law or English law concepts could lead to an election of English law being inferred, even where the testator had not necessarily intended for English law to apply to the French estate. It is therefore sensible to review the provisions of any existing Will to avoid any unintended consequences.

If one does not wish to make an election of law, it is also possible to expressly state within the Will that its provisions should not be regarded as an express or implied choice of law.

As for English Wills that predate the coming into force of Brussels IV, the choice of English law is often deemed, and the actual intention of the testator is disregarded. In such instances, opinions diverge as to whether English law should apply to the whole of the deceased’s succession, or whether French law should still apply to the French property by virtue of the English conflict of laws rules and the renvoi mechanism. This has the potential to create tensions between the beneficiaries and the deceased’s heirs, but should hopefully become less of an issue as time goes by.

Choice of law and types of Will

Where a choice of law is made within a Will, we are often asked whether it would be preferable to have one single Will covering the testator’s worldwide estate, or one Will in each jurisdiction. In truth, there is no ‘one size fits all’ response to this, and each option has its own pros and cons which should be assessed and discussed in advance of any Will preparation.

For individuals with Wills in more than one jurisdiction, it is advisable to review all the Wills to ensure that they do not inadvertently contradict or revoke each other.

However, regardless of which option is used, the election of foreign law will inevitably add complexity to the administration of the estate, which can increase costs and administration timescales. Whilst most of these hurdles can be overcome, it remains sensible to consider all other available options as part of a thorough analysis of the individual’s estate planning situation and needs.

Conclusion

Whilst estate planning practitioners have mostly embraced Brussels IV, some minor adjustments would be welcome, and it is also hoped that the controversial French law will be revoked well before the Regulation’s next 10th anniversary! If you have any questions or would like advice on anything in the article, please get in touch with our specialist French Legal Services team through this website or by calling 0330 404 0768.