Far reaching changes in succession law at a European level became operational on 17th August 2015 when the EU Succession Regulation (EU/650/2012), known as Brussels IV, came into effect. Brussels IV will allow a person to choose which rule of law will apply to the distribution of their estate on death. This article will look at the implications for those Irish people who have property interests abroad in countries within the EU.
Freedom of Testation v Forced Heirship
Cross-border succession issues are usually complex, as succession laws differ considerably from one EU state to another. Many countries operate widespread rules of strict forced heirship which dictate that at least a fixed share of the estate must be left to certain members of the immediate family.
For example, in France children may be entitled to ¾ of the estate if there are three or more children and in Germany a surviving spouse is entitled to ½ of the estate, and the children are entitled to the remaining share.
These rules will apply even if it is against the individual testator’s wishes and severely curtail freedom to choose who they wish to benefit on their death.
Brussels IV harmonises the law which applies to an individual’s estate across all EU territory, so that the law of the country in which the person is habitually resident will apply to the entire estate. However Ireland (along with the UK and Denmark) have opted out of Brussels IV.
However, those with Irish nationality can make an election under Brussels IV in their Will for Irish law to apply to their entire estate, including assets situate in the EU. Accordingly, they can elect to have Irish law govern how their property situated in the EU (except for property situated in the UK and Denmark) is dealt with and thus avoid the forced heirship rules in other EU countries.
Irish Inheritance Law
Regardless of whether a person has made a Will providing for his spouse, under Irish Law the spouse has certain rights to inherit under Section 111 of the Succession Act 1965.
Intestate – Without a Will
|Spouse only||100% to spouse|
|Spouse and children||2/3 to spouse and 1/3 to children|
|Children only||100% to children|
Testate – With a Will
|Spouse and no children||Spouse entitled to legal right share of ½ of estate|
|Spouse and children||Spouse entitled to legal right share of 1/3 estate|
The Succession Act 1965 provides that the spouse has the entitlements above known as “the legal right share”. If a testator provides less than the legal right share in their will, then the surviving spouse has the right to elect to take the provision in the Will or alternatively the legal right share. The surviving spouse must be notified of their right of election and must make an election within 6 months of notification, otherwise the provision in the will takes effect. To that extent the spouse, must take a positive step to ensure their legal right share is obtained. Time only commences when a formal notification of the right of election is given to the spouse.
If no provision has been made for the surviving spouse in the Will, case law suggests that the spouse has an automatic entitlement to the legal right share.
A child is not entitled to any defined share of the estate and a parent is not obliged to treat their children equally or to benefit them at all. What a parent is obliged to do, however, is to give consideration to each of their children and to consider in what manner to benefit them. A disappointed child may institute a Section 117 application seeking further provision or provision from the estate where the child proves to the satisfaction of the court that the parent has failed in their moral duty to make proper provision for them in accordance with their means. A Section 117 application by a child cannot affect the legal right share of a spouse or bequest in a will to the spouse (mother of the child)
Generally speaking, to succeed a child must have a particular need which the means of the testator can satisfy. If no such need exists, even where no provision has been made by the testator in their will or while alive, the court cannot intervene. Not leaving enough is not sufficient to prove a claim.
Which Law Will Apply to Your Will?
A person of Irish nationality may now elect, through Brussels IV, for Irish law to apply to their entire estate and all their EU situate assets (save for the UK and Denmark).
In the event of a failure to elect, then which law will apply? The connecting factor for Ireland is domicile. Irish law provides that a person’s domicile determines the succession of moveable property (shares and bank accounts for example) and immovable property (land and buildings) is determined by the law of the country in which the property is located. Domicile is a legal concept determined by reference to a person’s intention to permanently or indefinitely reside somewhere.
Illustration of the Effects of the Changes
Alice is habitually resident in Ireland with property in France. Under the regulations France should apply Irish law as she is habitually resident here. However, as the regulations are not recognised here, the rules above, ie the laws of the country in which the property is situate, will apply to the property, in this case French Law, so that the matter reverts to France. Forced heirship will therefore apply.
This could be avoided by Alice simply electing in her Will that the law of her nationality (Irish Law) applies to her Will and thus avoid forced heirship rules.
For those with property abroad situated in the EU, who wish for it to be passed on after their death in accordance with Irish law, an election to that effect in their will should be incorporated. Those with existing wills ought to review their wills to incorporate the necessary changes.
These changes do not affect Irish inheritance tax rules.