32 SUCCESSION Law Society Gazette www.gazette.ie December 2013 Succession

Aileen Keogan is a solicitor, tax SLALOM consultant, and Most of the ‘Brussels IV’ Regulation on Succession Law will not apply until August the author of the 2015. It is relevant now, however, for making wills that could come into effect after Law of CAT (ITI annual publication) that. Aileen Keogan tackles the black slopes of succession planning and The Law and Taxation of Trusts (Tottels 2007) s Irish solicitors, we can advise on Irish Union apply different PIL conflict-of-law rules for succession law while being conscious that succession purposes. Unfortunately though, it has the law of succession and the method of created ambiguities of its own. administering estates can be significantly different in other . Moveable feast Does this matter to us? It does if a The regulation seeks to apply a uniform system of Adeceased has cross-border connections, recognition of succession laws broadly whether he had personal connections based on the habitual residence of abroad or had assets abroad. “Unfortunately, the deceased, and with no distinction When cross-border issues arise between moveables and immoveables. in determining succession law, private it is not clear if The regulation will govern the PIL for (PIL) rules for each Ireland, Britain succession (testate and intestate) in the country are applied. These are known participating member states. All assets as conflict-of-law rules. Unfortunately, and Denmark are should, therefore, pass based on the PIL rules differ between jurisdictions. considered to succession laws of the member state in Some, like Ireland, use the concept of be a ‘third state’ which the deceased was habitually as the basis of determining resident. which ’s succession law under this part of Ireland, Britain and Denmark, applies. Others use the concept of the regulation. however, have opted out of the regulation, habitual residence, or the deceased’s somewhat frustrating its purpose. residence, or the deceased’s . This leads to Nevertheless, the regulation is still very Some, like Ireland, distinguish uncertainty in relevant for Irish practitioners because between moveables and immoveables – a testator can elect to choose the law of others do not. Even if a state recognises relation to the his nationality to apply to the succession the law of another state, it may only impact of the of his assets, even if that state is not a recognise the internal and not the PIL of participating state. that state. The courts in one state might regulation on Therefore, it is possible for an Irish not recognise a decision made by the Ireland, Britain national to elect to apply Irish law for court of another state, or might consider the succession of his assets, which will be the other court to be more appropriate, and Denmark” binding on the EU signatory members of yet the other court might refuse to take the regulation. jurisdiction. While the regulation came into force on 17 August The EU Regulation on Succession Law (no 650/2012), 2012, most of it will not apply until 17 August 2015. also known as ‘ Brussels IV ’, seeks to resolve the concern Notwithstanding this delay, the regulation is relevant that, to date, different member states of the European for practitioners now, as clients have the opportunity to Law Society Gazette www.gazette.ie December 2013 SUCCESSION 33

FAST FACTS

> When cross-border issues arise in determining succession law, private international law (PIL) rules for each country are applied > The EU Regulation on Succession Law seeks to resolve the concern that to date different member states apply different PIL conflict of law rules for succession Succession purposes > When dealing with cross-border estates, care will need to be taken to account for the Succession Regulation, as it will affect Irish practitioners in succession planning

Slippery slope...

POSSIBLE EFFECTS ON IRISH PRIVATE INTERNATIONAL LAW

SCENARIO 1 Irish law would apply to all the assets. SCENARIO 3 Deceased dies habitually resident in Ireland This doubt should be reduced if the Deceased dies domiciled and habitually resident holding a French domicile and nationality and deceased elected to apply the internal law of in Ireland, an Irish national holding Spanish holding French assets, both moveable and his nationality, where France would then apply immoveable property. Without a under immoveable. No choice of law. Ireland applies its law to the whole estate. Irish PIL rules, the Irish courts would apply the lex Irish PIL so that the (French) situs and seek for Spanish law to apply. applies to the moveables and the lex situs SCENARIO 2 Assuming Ireland is a third state, Spain must (French) to the immoveables. Deceased dies an Irish national, habitually accept the PIL of Ireland, as the deceased was French law, however, applies Irish law to resident and domiciled in Germany. Irish law habitually resident there – but this is not without all assets under the habitual residence rules. will apply to immoveables situate in Ireland, as doubt. Prior to the regulation applying, Ireland would If Ireland is a third state under the regulation, Ireland is not a party to the regulation. have considered accepting the from Spain, France would accept the renvoi (see page 25) However, Germany will account for that and so the regulation appears to provide an opposite to it under Irish PIL, and French succession law division in determining the administration of the outcome than before. A choice of Irish law would be would apply to all the assets. If Ireland is not assets worldwide under German law – that is, helpful here, whereby the choice would be for the a third state under the regulation, the internal the assets will be taken into account in dividing Irish internal law to apply to allow Ireland accept (not PIL) laws of Ireland should apply, so that up the remaining estate under German law. jurisdiction over Spanish immoveables. Law Society Gazette www.gazette.ie December 2013 SUCCESSION 35 make wills now that could come into effect reviewing harmonisation of inheritance heard or on to another jurisdiction. on a death after 2015. tax, but this is still at an early stage). Where Irish courts have jurisdiction – Nonetheless, the impact of the regulation for example, the deceased died domiciled Why are conflicts of law relevant? on where assets are to pass will inevitably in Ireland or there are Irish immoveable The determination of where a deceased’s impact on the tax payable. assets – the Irish courts, as the forum court, estate passes is relevant in determining: will apply Irish PIL in determining whether UÑ wÑw ÅVi`шi‹ÅȈ‹°Ñ°Å ä‹È‹ ›ÈÑ>ÅiÑÓ Ñ>°°’ç] Choice of law Irish law or foreign law should apply. UÑ wÑӈiі>Óŋ– ›‹>’ÑÅi€‹–iÑ ÅÑÈÞÅä‹ä ÅȈ‹°Ñ When it comes to ascertaining When, following the provisions under a joint tenancy is to be which law should apply to the application of the Irish PIL accounted for, and estate of a deceased, different “The regulation rules, it is decided that a UÑ wÑӈiÑV’>åL>V‘Ñ°Å ä‹È‹ ›ÈÑw Åр‹wÓÈі>`iÑ jurisdictions look to different is still very foreign law governs the during a deceased person’s lifetime is connecting factors and apply matter, the decision is made applicable. their PIL rules accordingly. relevant for Irish by the Irish court as to The connecting factor for practitioners whether to apply the law of ‘Forced heirship’ is the term used where Ireland is the domicile of the foreign country and send a state provides that specified persons the deceased. Irish law because a the matter to that jurisdiction. automatically have rights to the succession provides that the lex domicilii testator can elect However, where the Irish of a portion of a deceased’s estate, taking determines the succession of to choose the law court applies the whole of the precedence over any will of the deceased. moveable property; whereas law of the foreign country, We are already familiar with the Irish fixed the succession of immoveable of his nationality it also should apply that and discretionary based forced heirship property is determined by to apply to the country’s PIL. In such a case, provisions under section 111 of the Succession the law of the country where the foreign country’s rules of Act 1965 , giving a spouse a right to elect to the property is situate (the succession of his may refer the take a legal right share; and under section lex situs ). In contrast, the assets, even if matter back ( renvoi ) to the 117, which provides children with the right regulation provides that, law of Ireland. If so, the Irish to claim for a share. between the participating that state is not courts must decide whether to Succession should not be considered in member states generally, a participating accept the renvoi and so apply isolation to matrimonial property regimes. the habitual residence of Irish internal law. Before applying any inheritance rules to the the deceased will determine state” Under the regulation, estate of a deceased, it is first necessary to the forum that applies the renvoi is abolished between determine exactly what the estate includes. succession law of that deceased. participating member states. If the This process includes consideration of the However, the regulation recognises that applicable law is that of a ‘third state’, the matrimonial property regime and joint a person may wish the law of his nationality PIL rules of that third state are included, tenancies where the asset may pass outside of to apply, even if the person has acquired insofar as they make a renvoi to the law of a the succession under matrimonial contract a habitual residence in another state. The participating member state or to the law of law or by survivorship. effect of a choice of law is that the internal another third state. Clawback provisions often feature in law of the nationality applies and not its Unfortunately, it is not clear if Ireland, forced heirship regimes. These provide PIL, and so the national court should accept Britain and Denmark are considered to that, where a statutory heir is not able to jurisdiction. Irish practitioners with Irish be a ‘third state’ under this part of the received his correct share on the death of national clients who have cross-border regulation. This leads to uncertainty in the deceased because the assets are eroded, issues should therefore consider whether to relation to the impact of the regulation on assets given away during the deceased’s elect to apply Irish law to the entire estate Ireland, Britain and Denmark. lifetime can be brought back into account to avoid foreign forced heirship provisions for the purposes of calculating the share of to apply in contrast (or possibly in addition) Succession planning the statutory heir. We are familiar with this to Irish forced heirship provisions. When dealing with cross-border estates, in Ireland under section 121 of the Succession care will need to be taken to account for the Act 1965 . Doctrine of renvoi Succession Regulation , even though Ireland The regulation only deals with assets The doctrine of renvoi occurs in the is not a party to it, as it will affect Irish passing under a deceased person’s will process by which a court adopts the rules practitioners in succession planning. With or intestacy, and so assets passing by of a foreign jurisdiction with respect to careful planning and the consideration survivorship are still dealt with under local any conflict of laws that arises. In some of the use of the choice of law based on law. Nor does the regulation affect the instances, the rules of the foreign state nationality, there may be opportunities to taxation that may arise in any member state might refer the matter back (‘ renvoi ’) to the minimise complications later. A valid choice on the death of a person (the EU is currently law of the forum where the case is being of law now will be effective in 2015. G STRESSED?

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