Personal Law

If you own a holiday home in Europe, you may wish to write or amend your will before 1 November 2019.

Your holiday home in Europe

If you own a holiday home in Europe, the law determines to whom that property passes on your death. The law of the country in which the property is situated may apply. This may not reflect your wishes.

The EU succession regulation allows you to make an election that Scots law is to apply. That election allows you to determine to whom you can leave the property. This may be preferable. Many EU countries have rules which, for example, prevent you leaving the whole of that property to your spouse. Scots law does not have any such rules in relation to homes, and you can leave them to whomever you like.

In that case, it would be preferable to make an election in your Scottish will for Scots law to apply. Careful drafting is required to make that election, and bespoke advice is required to ensure that that election is not contradicted in a foreign will.

There has been doubt about whether this EU regulation can be used effectively by British residents because the UK has not signed up to it. Because of that, the Scottish legal system continues to apply the law of the country in which the home is located – so in the European country where you have your property. There is the potential for confusion because it remains an unresolved question whether the European country in question would in turn apply the EU regulation and respect an election that Scots law is to apply. While the legal position remains unclear, making the election in your Scottish will is however advisable. It is your only chance to remove yourself from rules which say to whom you can leave your holiday home.

After Brexit, it may be that the EU will continue to respect the wishes expressed in a Scottish will made before Brexit. Therefore you should consider writing or amending your Scottish will before 1 November 2019.

After Brexit, if you write or change your will, or buy a new European holiday home, but retain a Scottish domicile when you die, Scotland would continue to apply the law of the country in which any real estate is situated. Whether the EU state would then apply its own law, or that of any alternative election made by you in your will, is less clear.

If you have a holiday home in Europe you should take advice on what the position would be on your death and have your will drafted accordingly, before 1 November 2019.

Other issues

Some EU countries charge a wealth tax on assets held there by non EU nationals. UK nationals with foreign homes may no longer be protected from those taxes when they become a non EU national after Brexit.

We have blogged separately on the potential impact of Brexit on family trusts and EU tax reliefs.

Conclusion

Brexit brings scope for changes that may impact individuals and their personal taxation and succession. Considered advice will be required. If you have any questions, please get in touch with your usual Brodies contact, or one of the individuals below.

Leigh Gould

Partner at Brodies LLP
Leigh advises Personal clients on succession planning, being the passing on and protection of assets, in the most tax efficient way. This includes wills, trusts, executries and powers of attorney, but Leigh also advises on using additional structures for holding and passing on wealth and minimising tax, such as charities, partnerships and family investment companies. She has a particular focus on advising clients with land and rural businesses and also on contentious trust and executry issues.
Leigh Gould

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