The Euros

For many, sporting attention turns to qualification for the UEFA European Football Championship. The Euros. For the international/ constitutional lawyer (not me!), Group A offers Brexit (Scotland), EFTA (Norway), the EU (Spain and Cyprus) and, on a European level, all teams are in the Council of Europe (including Georgia). The global arena is also important for succession and estate planning matters.

There are, for us, four critical points to consider when dealing with succession across borders. Domicile, land and buildings, will validity and the EU Succession Regulation.

Domicile

Very broadly, it is the country to which you are most legally connected. Many legal points flow from domicile (or similar other concepts used in somecountries). It will affect the validity of wills and decide which law governs succession to, at least, your moveable estate. Moveable estate being essentially all assets apart from land and buildings. We will return to land and buildings in a moment. Domicile can also have an important role in the application of any forced heirship systems that determine that certain parts of an estate must go to certain family members irrespective of the terms of a will. One to watch.

For more on domicile (via Rod Stewart) click here.

Land and buildings

We just mentioned the role of domicile in succession to moveable assets. For many, many countries the law of the jurisdiction in which any land and buildings is physically situated will govern succession to such land and buildings. (We do English but those that like Latin call that the lex situs.) This role of that country’s law in personal estate planning with that foreign asset needs to be considered.

It means one might need a will in that other country. There might be forced heirship that applies to land to factor into thoughts and planning. The process and administration to transfer title following death requires attention. Getting good and reliable local advice that connects with your Scottish estate planning is the critical step to get this right.

Where do I sign up? Validity of wills

Domicile, habitual residence, the assets involved and physical location at the time of making a will can all affect how a will is validly signed.

Even after Brexit… the EU Succession Regulation

We have talked about this before in more detail (click here) but a reminder now about the role of the EU Succession Regulation. This can be very useful. It can affect will drafting in Scotland. It can affect the form of any will in the other relevant country. If there are to be two wills, they need to coordinate with each other.

Again, joined up Scottish and foreign advice is needed to navigate this. The way the regulation works can be a very useful. It can be critical to smooth succession and ensuring the ‘right’ people inherit your estate.

A ‘bonus’ European update: charities and UK tax

Unlike the other great European sporting event we have just had, the Six Nations, no bonus points in the Euro qualifiers. But a bonus update here. Although, it is one that restricts the notion of ‘charity’ and ‘charitable’ under UK tax law.

The definitions of a charity and a Community Amateur Sports Club (CASC) for tax purposes have changed. This alters over a decade of these definitions being based on EU case law.

The new rules will change things so that only charities that come within the jurisdiction of the High Court in England, Wales or Northern Ireland, or the Court of Session in Scotland will qualify for UK charitable tax reliefs .

For CASCs, it will change the location condition so that the CASC must be based in the UK and provide facilities for eligible sports in the UK.

If an individual or corporate makes a donation to a non-UK charity from 15 March 2023, UK tax reliefs (such as gift aid) are only available if the charity has ‘asserted their UK charitable status’ prior to 15 March 2023 under transitional provisions. After April 2024, taxpayers will not be eligible for UK tax relief on donations to EU or EEA charities and these entities themselves will be unable to claim gift aid.

New applications for charity tax recognition from 15 March 2023 must meet the new definition. The new rules can affect some legal drafting in documentation for charities.

For help on international succession and charities issues, get in touch with Alan Eccles: alaneccles@bkf.co.uk / 07470808717.

Alan is the Scottish author for the textbook, International Succession.

“Alan is a professional, dedicated and passionate private client lawyer.” Another interviewee enthuses: “Alan has excellent experience and technical knowledge, and he is very generous with his time.” Chambers High Net Worth 2022

“Alan is highly experienced in advising third sector organisations on governance and constitutional issues, including charity establishment and modernisation… He blends excellent technical advice with both pragmatism and plain communication.” Chambers and Partners 2023

Making your mind up: Eurovision and EuroSuccession

Are you gearing up for Eurovision? Some will be excited for the song contest… others less so. But with this glitzfest returning after a 2020 covid cancellation, it makes us think about… European succession law and related points.

“Making your mind up”: thanks Bucks Fizz for this advice

The EU Succession Regulation appeared on the scene in 2015. It sought to create a streamlined way to deal with estates. Principally by enabling a unitary approach in an individual’s estate on which law governs matters irrespective of the location of the assets. That single, unified approach is created by making the correct provisions and choices in will(s)… making your mind up, if you like.

Without this unified approach, often, the rules will work that land and buildings are governed by the law of the country in which they are situated. Everything else is regulated by the law of your domicile (the country to which you, as a human, are most connected).

So, to take advantage of having a single, unified approach to the governing law for your assets on death, the right wording needs to be put in your will(s) to ensure an appropriate and valid election under the EU Succession Regulation.

This all means that a Scottish person can have Scots law govern succession to their whole estate, even though there is e.g. a French villa. But you need to make positive choices in your will(s). Making your mind up… and writing it down is essential to this.

Do I need a will in the country where my holiday home is situated?

The EU Succession Regulation will enable e.g. Scots law to apply. But there might be reasons why a foreign will is required to help streamline the foreign process on death.

That foreign will must be complementary to the e.g. Scottish will. Neither will should attempt to the revoke the other and the wording used to take advantage of the EU Succession Regulation needs to work across both the Scottish will and the foreign will. This is best achieved where there is direct dialogue between the Scottish and foreign solicitor.

Avoiding forced heirship rules: keeping greater control

One positive by-product of being able to opt out of a foreign legal system is to avoid any unhelpful ‘forced heirship’ rules. That is automatic succession rights that certain family members have irrespective of the terms of a will.

As Scotland has legal rights (a type of forced heirship) over moveable assets only, opting out of a foreign system is particularly relevant in a Scottish estate with homes and land held abroad. It means that your will can control succession to an overseas home and land.

What about tax?

Opting for Scots law to apply to the estate does not necessarily alter the tax treatment. There may still be tax in the country in which assets are situated to factor into planning.

What about Brexit?

The status quo essentially remains. This flows from the UK (along with Ireland and Denmark) having opted out from the outset of the EU Succession Regulation. The UK had been and is still a ‘third’ state under the Regulation. It has, however, the curious consequence that those in the UK can opt for e.g. Scots law to apply to their e.g. Spanish home, but the opposite would not be possible.

Brexit does have the potential for relevance in some areas such a charitable bequests and gifts as well as the application of agricultural property relief. For now, however, no change. And in wider estate planning compliance, there remains European and international transparency rules that require consideration and adherence. For advisers wishing a summary of the main compliance requirements, we have been part of this webinar (available on demand as a recording).

What about Australia?

For the geography fans, Australia being part of Eurovision is perhaps interesting. Australians have, of course, taken the wonders of Eurovision to heart.

Australia is an interesting to one to mention in the context of estate planning. It has no inheritance tax. It taxes capital wealth transactions and transfers through capital gains tax. The tax treatment of the estate will be based, in part, on domicile. If one country (e.g. UK) has inheritance tax and another (e.g. Australia) does not, then identification of domicile and the planning that flows from that can be of fundamental importance.

For help and advice on wills and succession planning (across jurisdictions) get in touch with Alan Eccles: alaneccles@bkf.co.uk / 07470808717.

Alan Eccles is the Scottish contributor to the textbook, International Succession.

“An experienced lawyer” who is “a superb strategist and is extremely knowledgeable”. Chambers High Net Worth 2020 directory

Alan Eccles is “one of the leaders in private client expertise in Scotland.” Chambers High Net Worth 2019 directory

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