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Jean-Yves Gilg

Editor, Solicitors Journal

Express elections 'on succession

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Express elections 'on succession

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In the aftermath of the Brexit vote, clarity is needed on the EU Succession Regulation, writes Kate Johnson

In the aftermath of the Brexit vote, clarity is needed on the EU Succession Regulation, writes Kate Johnson

Whether you're from the 'leave' or the 'remain' camp, one thing everyone can agree on is that, for the time being at least, Brexit has created a great deal of uncertainty which is far reaching and touches on more than just politics and economics. But one area of law directly connected with Europe becomes more rather than less certain on the UK's exit from the EU.

In 'Home or Away?' (SJ 159/25) I discussed the EU Succession Regulation that came into effect in August 2015. The regulation was introduced to harmonise the succession of EU assets - namely the law of
a person's habitual residence
at the time of death. As an alternative to this now default position, a testator can elect
for the law of their country of nationality to apply instead by making what is known as an 'express election'.

The regulation applies to assets in all EU member states, except in those that did not opt in to the regulation (Denmark, Ireland, and the UK). The testator does not need to be a national or resident of the EU. For example, a Canadian with a holiday home in France can now elect for Canadian succession law to apply to their French property instead of France's forced heirship succession rules.

If, however, the same Canadian did not make such
an election, and relied on the default position that their place of residence at the time of death would govern the succession
of their French home, they would be in for a nasty surprise. Canadian succession law would refer the matter back to France for the French succession law
to be applied. But, where an express election is made the regulation is drafted in such
a way that France would not accept that referral and Canadian law would still apply.

Our French holiday home-owning Canadian must therefore make an express election for Canadian law to apply in order to avoid the French forced heirship rules. The election would be made in their will.

The position would not be
the same for an Austrian with
a French holiday home. They could potentially rely on the default position because the regulation stops participating member states from accepting
a referral from another member state. So even if Austrian law tried to refer the matter to France, it would not be accepted by the French.

The UK position has been far less certain. The UK, for now at least, is a member of the EU.
So you would be forgiven for thinking that if UK law refers the succession back to France, the French would reject the referral. But because the UK did not
opt in there has been a lack of clarity as to whether the UK is a 'member state' for the purposes of the regulation. The popular view on the continent has been that the UK is not. If this is correct, an express election
is needed to stop France accepting the referral and applying French succession law.

It is for this reason that
UK advisers have been recommending including an express election in wills where appropriate. In other words,
a cautious approach, with a
far from straight-forward explanation, has been adopted.

Exiting the EU would clear
up the issue once and for all.
It would make it a lot simpler to explain to clients why an express election should be considered. The UK would not be a member state in any sense of the word,
so an express election would be essential for any eligible testator wanting UK law to apply to their property in the EU (other than Denmark and Ireland). Some clarity in these confusing and challenging times would come as a light relief.

Kate Johnson is a solicitor at Wedlake Bell  @WedlakeBell www.wedlakebell.com

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