Rules designed to allow national laws be applied to succession assets elsewhere in EU, reports the Irish Times.
Irish owners of holiday homes in Brittany, golf properties in Qunita do Lago, or apartments in Puerto Banus are now able, for the first time, to decide to whom they wish to leave these properties under new EU succession regulations .
The regulations came into force on Monday and will apply in relation to deaths after this date.
The rules are designed to allow people to apply their own national laws to their succession assets in other EU states which have signed up to the regulations, thus avoiding so-called forced heirship rules in place in many European countries.
These impose succession principles on the owners of properties, and determine how the property may be passed on to spouses, children and other beneficiaries.
In France for example, children may be entitled to three-quarters of the estate – even if this is against the wishes of the property owner who may wish to leave the property to a non-relative. In Ireland on the other hand, provided you have a valid will, you can decide to whom you wish to leave your estate.
Along with the UK and Denmark, Ireland opted out of the new succession regulations as, according to the Department of Justice and Equality, opting in would have “interfered to an unacceptable extent with the manner in which estates are administered in this jurisdiction”.
However, Irish residents are likely to still benefit from the rules if they own a property in one of the 24 other EU member countries, including holiday home hotspots Spain, France and Portugal, as well as investment sites such as Germany.
This is because they will be able to elect for the law of their own nationality – ie Irish law – to apply in these countries, which are bound by the new regulations. While Irish people with properties in the UK and Denmark won’t be able to apply the rule, it may be less of an issue, given the similarity of UK inheritance rules.
Solicitor and tax consultant Aileen Keogan, who specialises in succession planning, says the new rules are good news for many people.
“It’s a welcome regulation, as it definitely clarifies matters . However, it does remain to be seen what way certain ambiguities will be interpreted by local courts,” she said, adding that “ we will have to see it in practice”.
For those with property abroad, who wish for it to be passed on after their death in accordance with Irish law, action may need to be taken now.
Kildare-based solicitor Alvaro Blasco, who advises Irish people on Spanish property transactions and says it can be a “minefield”, says the new law is beneficial, but it means you will either have to make a will, or update an existing one, clearly indicating that you want Irish law to govern your estate.
“It’s extremely important to have a Spanish will which will assign that the law that governs that will is Irish law,” he says .
However, before making any moves it may be important to get tax advice also as, if people invoke the nationality rule, they may then find themselves caught in a “tax nightmare”, notes Ms Keogan, particularly in the case of France.
For reasons such as this, she recommends that people with foreign properties reconsider their wills and tax planning in light of the new rules.