With the continued uncertainty over Brexit, in this article we look at the effects of the UK leaving the EU and whether when making a Will in Bristol this should be considered.
The first and most obvious concern is the potential fall in house prices and whether this should be considered in amending any Will or Will Trust already prepared. In September 2018, B Mark Carney the bank of England governor stated that a no deal Brexit could result in a reduction of up to one third in property prices. Coupled with a slowing in the economy, this could lead to a considerable reduction in the overall value of estates.
The good news is that if you have a property protection trust, flexible life interest trust, 2 year discretionary trust, or a variation on these written within your Will, no immediate action is needed. You may wish to consider your overall estate for Inheritance tax purposes and adjust any tax planning accordingly, however there is little risk of a no deal Brexit affecting the structure or effect of these Will Trusts.
The situation with what is known as the Brussels IV clause is less clear. In brief this currently allows for a person making a Will in Bristol to specify that any assets held in a member state of the EU be distributed under the terms of their UK Will. As with most aspects of Brexit things are a little unclear.
There will be certainty once we leave the EU in that the UK will no longer be a member state but instead a third state. Using the legal principle of ‘renvoi’ it seems that immoveable assets such as property can still be administered using a UK prepared last Will and testament, however when it comes to immoveable objects, such as chattels, cash and shares, our domestic law will still look to the laws in the jurisdiction in which movable assets are held.
The UK government advice is that any valid Will prepared prior to Brexit will still apply to property situated in the EU, however the effect of the Will in relation to property abroad continue to be the subject to the law in which the property is located. Inheritance tax is still the same and the tax is levied on transfers of assets held worldwide by individuals domiciled in the UK and transfers of UK assets by non-domiciled individuals.
In short extra care needs to be taken when drafting a Will dealing with movable and immoveable property located in a country where Brussels IV applies. It would be prudent until case law decides on these points for clients with such assets to prepare a Will in the country the assets are held to avoid any potential difficulties in the future.
We will continue to monitor a post Brexit UK and guide our clients on any shift in jurisdiction and tax when Will writing in Bristol. To find out more please contact the consultant assisting you or call Rose & Trust of Bristol on 0117 369 1969.