A growing number of Irish citizens now have properties abroad. Whilst many might assume that the will they made many years ago in Ireland would apply to their holiday home in Spain, this is not the case.
Until recently, Irish succession law could not govern the way in which a person’s foreign property was to be dealt with after their death. In fact, the laws of the country in which the property was situated would dictate what was to happen to that property on the death of its owner. This inevitably created difficulties.
EU Regulation 650/2012 aims to deal with the rising number of what are known as “cross-border successions”.
The Regulation applies to deaths after the 17th August, 2015. The intention of the Regulation is to streamline the area of cross-border successions within EU member states and to apply the law of just one country to the administration of an estate comprising assets in different jurisdictions. The main objective of the Regulation is to apply a uniform system to succession law throughout the E.U. with the intention that all of the property of a deceased would pass according to the succession laws of the state in which the deceased was habitually resident.
Whilst Ireland (along with the UK and Denmark) has not participated in the application of the Regulation, it is nonetheless extremely relevant for Irish citizens with property located in one of the other E.U. member states. For example, an Irish person could choose to apply the law of his/her nationality to a foreign asset, even though Ireland has opted out of the application of the Regulation. This would mean that Irish succession law could apply to a person’s foreign property located in countries such as France, Spain, Portugal, etc. However, an Irish Citizen could not elect to apply Irish succession law to property located in the UK or Denmark.
Whilst the intentions of the Regulations are clear, it remains to be seen how the workings of the Regulation will be dealt with in practice. Certain ambiguities remain and it is not yet known what the practical consequences of the application of the Regulation will be.
Furthermore, the Regulation has not addressed the taxation consequences of the application of the Regulation across member states and this is, of course, a significant aspect of the administration of an estate.
It is important to note that the Regulation has not in any way altered national succession laws and accordingly, Irish succession law remains unchanged. However, Irish people with property abroad should review both their Irish wills and foreign wills and take appropriate taxation advice in light of this Regulation.
To find out more, please contact Sarah Moore.