Most of us are aware of the need to make a valid will, to ensure that those who you would wish to benefit from your estate will do so on your death. In planning ahead, by making a will, it is assumed that you will have some peace of mind, in the knowledge that you will have done all that you could possibly have done to make life as simple and as straightforward for those left behind.
However, this might not necessarily be the case, if you own property or assets abroad.
In such circumstances, it is important to ensure that any foreign assets that you might own will also pass to those whom you would wish to inherit, rather than to others who might inherit, in accordance with another country’s succession rules.
Even if you have made a will under Scottish law, it does not automatically follow that your property situated abroad will pass to those whom you have chosen to inherit, in terms of that will.
If the foreign property is located in an EU member state, such as France, the EU Succession Regulation, introduced in 2015, will regulate how an inheritance will be dealt with and will apply to the succession of your estate.
The EU Succession Regulation is binding in all the EU member states except the UK, Ireland and Denmark.
Although the UK opted out of this directive, it still affects the way that the ‘conflict of laws’ rules in Scotland, England and Wales and Northern Ireland interact with the rules of the EU member states where it applies. (The ‘conflict of laws’ is a set of rules, which determine which country’s rules will apply when you die.) The EU directive states that it is the law of where you are resident at the time of your death that applies to your estate, rather than the law of your nationality.
That said, the directive also states that if you make a valid will, then you can choose to state in your will that the law of your nationality will apply to your whole estate, even if you are resident in a different country.
For example, if you are a UK national and have made a Scottish will and you own property in France, but your main place of residence at the time of your death is the UK, it is likely that Scottish law will be applied to your estate in France.
On the other hand, if you are a UK national and you make a Scottish will, but your usual place of residence when you die is France, where you own property, the French succession rules are likely to govern who inherits your estate.
Nevertheless, as mentioned, this situation could be avoided by making a statement in your will that the law of your nationality would apply to your whole estate, in which event, the French property is likely to be wound up in accordance with Scottish law.
It is also worth noting, that if you were to die without any will, the Scottish ‘conflict of laws’ rules would be applied to your estate in France.
These rules state that the law where the assets are located governs the succession of heritable assets, such as land or residential property.
If your property were located in France, French succession laws and, particularly, the French “forced heirship rules” would dictate the way in which that property was inherited when you die.
An alternative, when planning the succession of property abroad, is to make a separate will in the country where that property is located and, therefore, exclude any foreign property from your Scottish will. Doing so could have certain advantages, such as being in the correct format and language for the country in which the property is situated, which, in turn, could speed up the formalities in winding up that part of your estate. A separate will could also have tax advantages and save time and expense in having to have a Scottish will validated abroad.
However, in having two such wills, it would be important to ensure that they were drafted correctly, to ensure that the provisions of each will were consistent and did not revoke the other, when being drafted or renewed.
What is clear is that the position with foreign assets can be anything but clear, and that, if you do own property abroad, it is important that professional legal advice be sought when planning the succession to your estate.
Katrina Venters is a private client solicitor in Russel + Aitken LLP