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Government opt out of Succession Rules

The Government have announced that they are opting out of the European Commission's proposed regulation on succession and wills. This means the UK will not be bound by this regulation when it is brought into force. Lord Chancellor Jack Straw reported that hundreds of thousands of UK citizens live and work in other EU member states and millions of others enjoy holidays in the EU. The diversity of rules and systems that apply to succession in different member states can make for considerable complications where a person owns property across borders. In principle therefore, efforts to simplify and clarify the rules that apply to international successions could produce huge benefits for UK citizens, and the Government are strongly supportive of the project in principle. However, there are potentially significant problems identified with the proposal that the EU Commission has published. The Commission’s proposal would allow owners to choose between the law applicable in their country of origin or their place of residence, would ensure that the rights of heirs are better protected. The Commission also wants to introduce a harmonised European certificate of succession that would ensure that the status of heirs and executors is recognised across the EU. That consultation document highlighted two key problems. The first, and most difficult of those, was “clawback”, which describes a legal mechanism where gifts made during a person's lifetime can be recouped after their death. The introduction of this concept into the UK could create major practical difficulties, particularly for the recipients of such gifts including charities.
The second key concern was the proposal's reliance on “habitual residence” as the sole connecting factor, that is, the factor of a person's circumstances which determines when the regulation's other rules apply. Using “habitual residence” in isolation in this way could mean that the relatives of anyone who lived abroad for a relatively short period of time and then died there, would find their estate was subject to a law with which they had no real connection. That could lead to unforeseen and unfair outcomes.
The Ministry of Justice's recent public consultation confirmed that these issues are widely considered to be of very significant concern. A report of that consultation will be published in due course. The Government have concluded that the potential benefits of this proposal are outweighed by the risks and have therefore decided that the best course of action is not to opt in to the proposal and the UK will therefore not be bound by the outcome. The Government intend, however, to engage fully with the forthcoming negotiations between member states on this proposal, with the aim of removing the points that currently cause concern and to deliver further improvements for citizens with links and assets in more than one country. If that can be achieved, the Government could then decide to seek to adopt the final regulation. That will be considered and consulted upon as appropriate at that time.

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