Expats, Wills and Brexit: Does Brexit change inheritance law?
Question
Is it best to make a new will before or post Brexit? I understand that inheritance laws change for expats after 31st December. Is this correct and what advice would you give?
Answer
If you do not have a Will, or your Will does not reflect your current wishes, then you should not delay in creating a new Will.
If you were to find that Brexit, or some other event, did affect your intentions, then you can easily and swiftly change your Will again if required. You cannot however change your own Will once you have died.
There is a popular misconception that your family can change your Will by a Deed of Variation within two years post death. However, this is a not a change of Will, it is an inheritance tax tool for the purposes of the UK Inheritance Tax Act 1984. The French consider it, correctly, as a redirection of assets by the beneficiaries. It is taxed as an inheritance by the original beneficiary, and again as a gift from them (not from the testator).
Thankfully, for the myriad problems that Brexit is responsible for, it should not (generally) have a negative effect on your Will or inheritance planning.
You will still be able to use your Will to elect the law of your nationality under article 22 of the EU Succession Regulation 650/2012.
If you have made a valid election of the law of your nationality in your Wills, then France will still apply your national law under the EU Regulation, and the terms of your Will shall be carried out, even if you do not leave your estate to your children, who would be reserved heirs under French law.
Watch out though – even if you do elect English law, that does not mean that English inheritance tax is elected. You cannot elect English inheritance tax.
If you are UK resident with a French property, then French inheritance tax applies to the French property. If you are French resident, then French inheritance tax applies to your worldwide estate.
The big unresolved difference relating to Brexit and inheritance is around legacies to foreign charities, which as things stand become taxable (potentially at 60%) rather than tax exempt.
If you are intending on making a new Will, don’t let Brexit stop you, and please don’t put it off.
John Kitching
Director
French Law Consultancy
Published in the December 2020 edition of Connexion France