In the wake of the UK Brexit referendum results, our clients have been asking: does Brexit effect my estate planning arrangements? Essentially, what are the implications of a Brexit on the succession matters of UK citizens living, say, in Malta, or even of EU citizens having assets in the UK. In the light of its yes vote to exit the EU, has the UK forgone forever the possibility of providing to its own citizens and other EU citizen a streamlined and coherent cross-border succession process?
A UK exit from the EU is likely to have little or no effect in the context of succession. The rules and regulations harmonising succession and probate processes in the EU are few and far between. Additionally, the UK has opted out from the only one regulation that attempts to harmonise cross-border succession.
The EU Succession Regulation
In August 2015 an EU regulation, the EU Succession Regulation No 650/2012, was enacted to address cross-border succession matters in the EU, with the aim of simplifying matters post-death in instances where assets are located in various jurisdictions. The regulation was enacted with the aim of providing legal certainty and to enable a faster and easier resolution of cross-border succession by establishing one applicable law and one court to govern the whole estate of the deceased.
Before the enactment of the Regulation, cross-border succession matters relied on the conflict of laws position of the various jurisdictions involved. The existence of different national rules made succession processes involving more than one EU country complex whereby different national rules applied depending on the location and type of assets. In Malta, the general principle was that the lex domicili (law of the domicile) of the deceased applied for movables, whilst the lex situs (the law of where the property is situated) applied to immovable property. Whilst the regulation’s aim is to provide an easier and faster process, today, a year away from its enactment, it still remains unsure whether the regulation is managing to do that. Certainly it brought about new rights to EU citizens. Indeed, whilst the regulation introduces the principle of the last habitual residence as a default position in relation to the law applicable to the particular estate of the deceased, it also introduced the option for testators to choose to apply the law of the country of their nationality to regulate their will.
BBC Brexit Interview in Malta of our Managing Partner Dr Jean-Philippe Chetcuti on the effects of an exit of the UK from the European Union. (fast-forward to 2.55 in the recording)
Brexit & Succession Planning for UK Citizens or other EU Held Assets
The regulation’s enactment was not an easy ride and did not bring the direct applicability in EU member states usually natural to all EU regulations. Indeed, the regulation applies in all EU member states except for the United Kingdom, Denmark and Ireland. Hence, whether in or out of the EU, the UK is not bound by this regulation. The regulation regulates the position of its provisions in relation to a ‘third-state’ mainly referring to non-EU states. However, the initial feedback during the Brussels conference organized by the European Commission and the Council of Notaries of the EU (CNEU) on the 19th November 2015 is that the opting out states should be considered as a ‘third state’ for the purposes of the regulation. Hence, ironically, the UK’s position under this regulation was and still is indeed of a non-EU state, even before the inception of the very idea of doing a referendum to exist the EU.
What this means in practice is that in succession mattes involving UK citizens and UK assets, the traditional private international law rules would mainly need to be resorted too, with an eye on the inter-relation of such laws with the provisions of the new regulation. Whilst being complex in that the different national rules have to be taken into consideration, this is what we lived up with until one year ago – a regime which is much older than the one year old regulation on EU succession and which lawyers and practitioners are familiar with, unlike the new regulation , which despite providing advantages, is a new law in relation to which the EU is still find its feet and testing its applicability.
