Succession law – the English rules of Private International Law (“PIL”)
English PIL rules make a distinction between ‘immovable’ assets (land and certain interests in land) and ‘movable’ assets (all assets which are not immovable assets, including personal chattels, bank accounts, shares and other investments).
Succession to immovable assets is governed by the law of the country in which the immovable property is physically situated. Succession to English real estate will therefore always be governed by English domestic law, meaning that the owner of the real estate can leave it to whoever they wish.
On the other hand, succession to movable assets is governed by the law of the country in which the owner was domiciled at the time of their death. The English law concept of domicile is a topic in its own right (which we have covered in more detail in our earlier note here; but if, say, a French domiciled individual died owning shares in a UK company, under English PIL rules it would be necessary to look to French law to work out which country’s law should govern the succession to those shares.
In the example above, the English PIL rules would not simply apply French domestic succession law (which includes forced heirship provisions) to the UK shares. Instead, the reference to French law would be to the whole of French law, including French PIL rules. To put it another way, in England we would (probably – this is all based on case law) apply whatever law a French court would apply; this is known as the doctrine of “double” or “total” renvoi.
The EU Succession Regulation – Brussels IV
For deaths occurring on or after 17 August 2015, the PIL rules on succession of all EU member states, other than the Republic of Ireland and Denmark, have been harmonised by the EU Succession Regulation ((EU) No 650/2012), otherwise known as Brussels IV (the ‘EUSR’).
Under the EUSR, the default rule is that succession is governed by the law of the country where the deceased was habitually resident at the time of their death. If that country is one of the participating EU member states, the domestic succession law of that country applies. If that country is not one of the participating EU member states (a ‘Third State’), then the reference will be to the whole of the law of that country including its PIL rules but only to the extent that those rules refer to the law of a participating EU member state or the law of another Third State that would apply its own domestic succession law (and which would not refer onwards to the law of another country).
However, the EUSR also permits individuals to elect for the law of their nationality to apply to the succession to their estate instead of the law of their habitual residence. Where a valid choice of law election is made, renvoi is banished altogether; the domestic succession law of the country of nationality will be applied.
Although the UK is not (and never has been) subject to the EUSR, it is still indirectly relevant to UK assets. Taking the example above of a person domiciled in France owning English shares:
- English PIL rules would look to the law of France because they are movable assets and France is where the deceased was domiciled;
- the French courts would apply the EUSR, so if the deceased was habitually resident in England on their death and had not made a valid choice of law election, the EUSR would look to the whole of English law including English PIL rules, which in turn would look back to the French law as the law of domicile; under the EUSR, that reference back to French law would be accepted, so that French domestic law (with French rules of forced heirship) would apply;
- if on the other hand the deceased had dual French and British nationality and had made a valid election under the EUSR for English law to apply to their estate, the EUSR would look only to English domestic law (full testamentary freedom) and would not accept the reference back to French law.
The EUSR is obviously directly relevant to individuals who own assets in a participating EU member state. For example, a British national owning a holiday home in France who did not want French forced heirship rules to apply could make an election under the EUSR for English domestic law to apply to the whole of their estate, including the French property. If they did not make such a choice of law election and the individual was habitually resident in the UK on their death, the EUSR would look by default to English law including English PIL rules, which would refer back to French law since that is where the holiday home – an immovable asset – is situated. French domestic succession law would then apply.
UK Inheritance Tax (‘IHT’)
Domicile and the place where an asset is situated are also relevant factors for UK IHT purposes.
If an individual dies domiciled (or deemed domiciled) in the UK, that individual’s worldwide assets will be subject to UK IHT (but a double taxation treaty or unilateral relief may apply in cases where more than one country charges IHT on the same asset).
Conversely, if an individual dies domiciled outside the UK (and is not deemed domiciled in the UK on death), UK IHT will only be due on assets that are situated in the UK (with some exceptions).
Matrimonial Property Regimes
We have already seen above that an individual may not be able to leave their assets as they wish on their death, even if those assets are in the UK, because the applicable foreign law may for example include forced heirship rules which dictate that a certain percentage/proportion of the estate must pass to children or other specified beneficiaries.
For individuals who are married or in a civil partnership, there are also matrimonial property regimes to consider; in many foreign jurisdictions, entering into a marriage or civil partnership will give the parties direct proprietary rights over each other’s assets, either immediately or crystallising on death or divorce. This is not strictly a succession law issue but in broad terms the effect can be similar to that of a forced heirship regime, in that an individual may not be able to distribute what they consider to be their assets as they wish following their death because the other party already owns a share or has a claim to them.
Under English PIL rules, the property rights of spouses or civil partners are governed by the law of the ‘matrimonial domicile’; if both parties are domiciled in the same country at the time of the union, the matrimonial domicile will be that country.
Will drafting – should I have more than one Will
It is common for people to have more than one will to deal with the devolution of assets in different jurisdictions. In practical terms, having multiple wills can simplify the administration of an individual’s estate (for example, the administration of the estate can proceed simultaneously in each jurisdiction where the individual left a will, as opposed to having to deal with the probate formalities of a single will in one jurisdiction at a time before being able to move on to the next).
Where an individual makes multiple wills, particular care is needed to prevent;
- accidental revocation, ie one will inadvertently cancelling another, and
- accidentally making more than one will purporting to deal with the same asset in the same jurisdiction; further complications arise where those wills provide for different beneficiaries!
In some cases, it may be better to have a single will; for example, to make a valid election to choose the law of nationality to apply under the EUSR, the election must be made in respect of the whole estate (so this might be undermined if for example an individual makes multiple wills but only includes the choice of law election in a will limited to assets in situated in the UK).
Resealing a foreign grant
Where a grant of representation has been issued in certain foreign jurisdictions, it may be possible reseal this foreign grant under the Colonial Probates Act 1892 (this applies to most countries which were formerly British colonies).
Resealing a foreign grant avoids the need to apply for a fresh grant in England and Wales. Once the foreign grant has been resealed, it can be used in the same manner as an English grant.
The English probate court will require the original foreign grant or an official copy, an official copy of the will, a notarial translation of the will if not in English, and a written request from each grantee for the grant to be resealed. Normal IHT reporting rules apply.
If you would like to discuss any of the issues raised, please do not hesitate to contact the author or your usual Payne Hicks Beach contact.