What now for Brussels IV?

The debate around the UK referendum on the EU is all over the news headlines. At the centre of the debate are issues such as the likely effect on the economy and Britain's global position should the UK vote to leave the EU. In my opinion, it is a decision that will have a significant (and potentially detrimental) effect on the daily lives of people who, at the moment, are unsuspecting.

One of the major pieces of legislation to come out of Europe in recent months is the EU Succession Regulation (Brussels IV). Much has been said about the regulation and although the UK government decided to opt out, it still has an effect on assets situated in states that have opted in that belong to UK residents.

In 2015, there were over 300,000 estates administered in the UK that had a cross border element to them. There will be many more UK individuals who will own assets in foreign states
and be affected by the regulation. I would hazard a guess that a vast majority of these individuals have not yet made a will, but live under the belief that there is plenty of time for dealing with that in the future.

As readers will be aware, there are different tests for mental capacity and the requisite capacity that is required for making a will. A person under the Court of Protection may be mentally incapable of managing their own financial affairs, however they still have the requisite testamentary capacity to make a will. Alternatively, the reverse position may apply.

Following the implementation of Brussels IV on 17 August 2015, in circumstances where an individual does not have the requisite capacity to make a will, it may be in their best interests for a statutory will application to be made.

However, this then leads to the question, how much consideration should the court have to the regulation, if any, when determining the inclusion of an express election on behalf of the incapacitated testator for a particular law of nationality to apply?

Under the regulation, the default position is that the succession laws of an individual's habitual residence will apply, unless that individual is manifestly more closely connected with another estate. However, an individual has a power to override this default position and make an express election for a particular law of nationality to apply. Most commonly, the express election would be found in an individual's will.

Primarily, the focus of the court is to make a decision that is in the individual's best interests.
The court will take into account the individual's past and present wishes and feelings, as well as the views of third parties and the individual. Taking all of this information into account, ultimately, it will be for the court to make a decision as to what is in the individual's best interest.

What steps (if any) do we as private client advisers need to take with regards to our clients?

The easiest way to avoid statutory will applications having to be made is to ensure that the individual, while they have full testamentary capacity, takes steps to make a will. I appreciate that this is not possible in all circumstances; there will be occasions where we may be called upon to provide evidence as to an individual's past and present wishes.

The regulation should not be ignored, particularly where clients are of dual nationality,
or where clients are residing abroad, given the effect that Brussels IV may have on assets situated in foreign member states. This is an issue that should
be raised with clients at the earliest opportunity.

David King is a solicitor at Hugh James

He writes the regular vulnerable clients comment in Private Client Adviser

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