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Lords warn against adoption of EU succession rules

29 March 2010

The House of Lords’ EU committee has published its report on the cross-border succession rules proposed by the European Commission last October recommending the UK should not sign up to the new rules.

The committee agreed with the Commission that harmonisation of succession laws across the EU was not desirable but that simplification of the law on cross-border succession would be of considerable benefit.

Under the EU’s draft regulation, the authorities in the deceased’s country of habitual residence would have jurisdiction to settle the succession.

It also provides that the law of that country would apply by default, but individuals will be able to opt out and choose the law of their country of nationality instead.

However, the committee warned against introducing measures aimed at simplifying the law that, in reality, would make it more complicated.

For example, the Lords felt the proposed test for determining which state has jurisdiction over a matter was too vague and would create uncertainty. Furthermore, under the proposal the commission runs the risk of introducing alien concepts into the UK legal system such as ‘clawback’.

In view of the above, the committee has advised the government not to opt in to the legislation at this stage.

“It is very apparent having conducted our enquiry that the EU needs to be very cautious in seeking to legislate in this highly complex area. The committee supports the principle of simplification, but given the complexity of the law involved and the lack of empirical evidence of the size of the problem, we feel that a more cautious, step-by-step approach than the Commission’s proposal would be more appropriate. The proposal must ensure adequate protection of the interests of all those involved – beneficiaries, the tax authorities and creditors,” commented Lord Bowness, chairman of the Sub Committee on Law and Institutions.

The European Commission estimates that 450,000 European estates involve cross-border issues annually, with a total value exceeding EUR 120bn.

Probate practitioners initially welcomed the proposal to simplify estates with an international dimension but charities have raised concerns that accepting legacies made in other EU member states could become risky.

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