Inheritance Law in Great Britain

and German-British successions

I. Which law is applicable?

Successions that affect both, Germany and Great Britain requires the determination of the applicable jurisdiction. For the lack of a genuine “international inheritance law”, the applicable law is determined by the affected states themselves.

1. Great Britain

Due to the fact that Great Britain is a Multi-Unit State, consisting of England Wales and Scotland, the Inheritance regulations differ between the different sources of law.

a. England und Wales:

The English conflict-of-law rules – solely recognized under customary law- follows the principle of territorial Scission regarding the hereditary succession.

Concerning the Succession to immovables the legislation of the state of situs (location) is the one to be applied. In regards of the successions of movables, the legal provisions of the last residence of the deceased must be applied. The classification of movable and immovable assets is left to the state of situs (location). Under English legislation real estate, all rights to lands as well as the built-in objects and supplies are classified as immovables. Other assets are treated as movables. The residence of the deceased is determined by the length of the stay and the willingness to adopt to the new domicile.

b. Scotland:

Like England, Scotland distinguishes between movable and immovable assets. The immovable assets are inherited under the law of the situs (location) of the property. The movable assets, on the other hand, are inherited under the laws of the last residence of the deceased.

1st Case: An English citizen passed away in Berlin and bequeathed an apartment in Berlin.

From the English perspective, German law is the applicable jurisdiction due to the situs (location) of the apartment. This reference (renvoi) is acknowledged by the German law.

 2nd Case: A German citizen deceased in Glasgow and bequeathed a valuable painting.

A painting is classified as a movable asset. Therefore, from the Scottish perspective, the domicile of the deceased is the decisive factor. In case the deceased resided in Glasgow, Scottish law must be applied.

2. Germany

To facilitate cross-border-successions within the European Union, the European Parliament and the Council passed the Regulation of Successions (Regulation No 650/12), applicable to persons deceased on or after 17th, of August 2015. Therefore, the European legislation has to be assessed by Germany as a ratifying state. According to the EU Regulation of Successions, the applicable jurisdiction to cross-border successions is determined by the last “habitual residence” of the deceased. This applies so long as the deceased did not determine the applicable legislation through a choice of law.

Nevertheless, England as well as Ireland and Denmark – does not participate in the European Regulation of Successions.

Caution! The new law also applies to English citizens residing in any of the other member states of the Regulation of Succession (“Loi uniforme”, Art. 20). For example, if an English citizen resides in Germany, the Regulation will be applied.

II. Settlement of the Estate

In the UK the principle of the separate settlement of the estate – executed by a personal representative- applies. The personal representative is considered to be the legal owner after the occurrence of death.

1. England und Wales:

The personal representative may be determined by testament (executor) or appointed by the probate court (administrator). The personal representative records all assets belonging to the estate and thereafter administrated the estate. The estate is distributed or alternatively transferred to a testamentary trust by the personal representative after the obligations of the estate are settled. Unlike the German law the there is no distinction of heirs and legatees. All beneficiaries are entitled to surrender claims against the personal representative.

2. Scotland:

Like England and Wales, Scotland applies the principle of the executory administration. The personal representative – either determined by the testator or appointed by the probate court is entitled to record, administrate and distribute the estate.

III. Matrimonial Property Regime

1. England and Wales

Under English and Welsh legislation the matrimony does not affect the proprietary rights of the spouses. In the case of dissolution of the marriage, the surviving spouse is compensated under inheritance provisions.

2. Scotland:

The statutory matrimonial property regime is the modified separation of property (Sequence 24 Family Law Scottland Act). The proprietary rights, on the other hand, are generally not affected by the matrimony. However, the surviving spouse is privileged under the inheritance law provisions.

IV. Substantive Law

1. England and Wales:

a. Intestate succession

In case, the deceased did not leave a will (testamentary provisions) the intestate succession provisions apply. The spouse, the children, and further relatives are entitled as successors. The entitled persons can be allocated into five orders. Children and the surviving spouse may inherit simultaneously. In contrast, the inheritance rights of further relatives are precluded if successors of a closer order exist. The surviving spouse is entitled to claim possession of all personal commodities of the deceased and a statutory legacy of 125 000 pounds as well as a lifelong right of usage of half of the estate. If the deceased does not leave any children but further relatives, the statutory legacy is increased up to 200 0000 pounds.

b. Will and Succession Contracts

The English, as well as the Welsh laws, contain a far-reaching freedom of disposal of property upon death. The freedom to dispose of the estate is solely restricted by family provisions to ensure the family welfare.

The effective establishment of a will requires the ability to testate and the ability to understand the impacts of the established will.

Furthermore, the will must be established in the written form and must be signed by the testator or an appointed person in the presence of the testator. Lastly, the testament must be acknowledged and signed by two witnesses.

The will allows a variety of arrangements, for instance, the personal the personal representative may be appointed by the testator. The distribution of the estate may also be organized in various forms. Legacies that entitle the beneficiary definitely and further ways of granting the estate through a testamentary trust must be distinguished. The testamentary trust is a special provision that follows the probate proceedings.

Inheritance contracts are not recognized under English law. Yet, the summary of several testaments into one document is valid (joint will).

Within the scope of a mutual will, interrelated provisions may be established. Testators are entitled to consider each other within the will and refer the estate to a third party after the death of the surviving spouse.

2. Scotland:

a. Intestate Succession

Unlike the English legislation the Scottish provisions determine that the estate is distributed within three steps:

Firstly, the surviving spouse receives due to “Prior Rights” the property rights of the deceased regarding the family home, the furniture, the interior and a fixed amount of 42 000 pounds. The amount is increased up to 75 000 if the deceased did not leave descendants. In case of a split estate the Scottish provisions of “Prior Rights” are nevertheless, applied.

In a second step, the Legal rights of the children and the surviving spouse must be fulfilled from the remaining estate. The surviving spouse is besides the children entitled to inherit one-third of the movable estate. If children do not exist the surviving spouse is entitled to inherit half of the movable estate.

In a third step the remaining estate is distributed to further relatives. The children of the deceased are privileged and prior to the other heirs, followed by parents and siblings of the deceased and eventually followed by uncles, aunts, grandparents and further relatives.

b. Will and Inheritance Contract

Regarding testaments that have been established after August 1995 the Requirement of writing (Scotland) Act 1995 applies. Due to the Writing Act, every written document signed by the testator is recognized as valid testament. However, a presumption of validity does only apply to those wills that ate dated and have been signed by the testator and that have been confirmed by a witness. If the requirements are not met, the evidence concerning the validity of the will must be provided during the probate proceedings.

c. Forced Heirship

The freedom of disposal is limited by the legal rights of the surviving spouse and the children. The legal rights have an effect comparable to legal portions.

V. Succession Taxation

The Inheritance Tax (IHT), consistently applicable within Great Britain, is unlike the German taxation created as a tax that applies to the entire estate. In occurrence of death, the inheritance tax is levied on the entire assets of the deceased as if the deceased had transferred the estate before his death.

If the exempt amount of 312 000 pounds is exceeded the uniform tax rate of 40 % applies regardless of the blood relation.

Regarding cases with an international element solely, the person of the deceased is decisive. In case the deceased resided in the UK, the entire assets are subject to taxation. Yet the foreign succession taxation may be credited. Yet, if the domicile was located abroad solely the assets located in the UK are subject to British taxation. Foreign inheritance taxes are not credited in this case.

Do you need help? Please do not hesitate to contact me

Rechtsanwalt Torben Swane
German Probate & Wills Lawyer, Specialist in International Probate and Estate Planning

Kyffhäuserstraße 11
10781 Berlin-Schöneberg
Fax: + 49 (0) 30 26 47 47 – 10

Phone: + 49 (0) 30 26 47 47 – 0 / Email: info@erbrecht-berlin.eu

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