The EU Succession Regulation, or Brussels IV, came into force on 17th August of this year.
It is directly applicable in the 27 “Regulation” states, but Denmark, the UK and Ireland have “opted out” of the Regulation. However, it will still affect anyone owning property or assets in a Regulation state, including Portugal.
What does the Regulation change?
Previously, in Portugal, a person’s nationality was applicable to their succession. With the Regulation, it is now the law of habitual residence that will apply to a person’s succession. If someone is considered habitually resident in Portugal, for example, then Portuguese law will apply to their succession.
Why is this a concern?
Portuguese law has rules of forced heirship, which means that you can only dispose of a certain portion of your estate by will. The remainder will necessarily go to your “legal” heirs, who cannot be disowned. This means that if you currently have a will leaving everything to your spouse, for example, this is not possible under Portuguese law if you also have surviving parents or children.
How can I ensure that my wishes are met?
The law of habitual residence will not apply if you make a will expressly choosing the law of your nationality to apply (and if you have more than one nationality, you can choose any one of these).
If you are a British national, for example, with closest connection to England and Wales, you can make a will stating that you would like the law of England and Wales to apply. This means that you have testamentary freedom (i.e. you can benefit who you like under your will) and you can thereby ensure that your wishes are met and the Portuguese rules of forced heirship do not apply.
Do I have to do anything if I am habitually resident in the UK?
Many people think that if they are habitually resident in the UK (England and Wales), then English law will apply anyway so there is no need to make a choice of applicable law.
Although it is correct to state that as the law of habitual residence, English law should in principle apply, because of a legal concept known as the “doctrine of envoi”, we will look to the UK’s private international rules to see which law applies.
The UK applies the law of domicile to moveable assets and the law of the country where the asset is situated, for immoveable assets. This means that if you are considered habitually resident in the UK, you may be faced with the situation where English law applies to your moveable assets (for example, a bank account) in Portugal, but Portuguese law applies to your immoveable assets (for example, a property) in Portugal.
However, if you have made a choice of law, the doctrine of renvoi is set aside and it is it the internal law of the law you have chosen, that will apply.
If you are reading this, you are most likely a foreign citizen living in Portugal or with assets in Portugal. In light of Brussels IV, your testamentary arrangements need to be carefully reviewed. There is no “one size fits all” solution: it is important to give careful consideration to your individual circumstances and see how the Regulation may impact any lifetime or estate planning that you have undertaken.
By making a will and making a choice of applicable law, you are effectively opting for certainty and taking control over how your assets will be dealt with.
For more information and advice, please contact Vicky Rodrigues – Advogada / English Solicitor: