British expats residing in EU countries need to ensure that they have an up-to-date will that denotes who they wish to inherit any property and assets they own abroad.
According to EU inheritance law, which was updated in 2015, people have the right to choose whether they wish to apply the rules of inheritance in their country of ‘habitual residence’, or they would prefer to apply the laws of the country of their nationality. If no preference is clearly stated, the default position is that the laws of the country of last habitual residence will apply to the whole of that person’s estate and determine who the assets pass on to.
The UK itself has opted out of these rules (as has Denmark and Ireland), but for EU expats who have bought property in their new country of residence or moved financial assets abroad, it’s important to understand what this means. Some EU countries, for example France, employ ‘forced heirship’ rules, which means that when a person dies, their estate is automatically passed on within the immediate family (partner, children, etc). However, there may be situations where the preference is for someone else to inherit all or part of the estate. In the UK, unlike many other EU countries, a person has the right to denote in their will how they wish their estate to be distributed, and can nominate any one they wish to receive all or part of the assets. An executor is appointed to ensure that the terms of the will are met.
While having an English will can in itself show a preference for having English inheritance applied to a person’s estate, the advice is for EU expats to clearly state which law they wish to be applied, so that in the event of their death, there is no cause for conflict. It’s advised that EU expats have their English will, but also a will in their country of residence clearly stating that they wish the laws of their country of nationality to apply.
The 2015 changes to inheritance laws are generally good news for British expats. Previously, should they die while abroad, their assets would be passed on in accordance with their residual country’s inheritance laws. However, this is still the case if no clear and definite preference is stated. Therefore, it’s important to seek professional guidance as an expatriate to ensure that there is a solid will in place that makes it clear where and how an estate should be divided. This helps to speed up cross-border succession upon death. The area of inheritance succession can be even more complex when people reside in one place, but own property and assets in one country or more, which is why a legal expert needs to be brought in to ensure that the entire estate is distributed according to a person’s preference.
It’s worth bearing in mind that, while the estate itself will be dealt with in accordance with English law, the country where the assets are based will still apply its own inheritance tax. Information correct at the time of publication.