A new inheritance law that is due to take effect across the European Union could make it easier for charities to raise legacy income from donors living in certain EU countries, including France, but harder for legacies coming from countries such as Spain, experts have said.
EU Regulation 650/2012, which comes into effect in most EU countries from 17 August, will mean that, for the first time, UK nationals from England and Wales living in countries including France – where wills are currently interpreted under the laws of the host country – will be able to specify in their wills that the laws of their nationality should apply to their estates, which will mean they can choose to leave all of their estates to charity. Before this they had to leave at least half of their estates to their children, where applicable, under forced heirship rules.
But the changes also mean that English and Welsh nationals living in Spain, who are currently able to leave their inheritance to whomever they wish because their estates pass under the laws of England and Wales, might now be subject to Spanish succession law. This would mean that a certain percentage of the estate must be left to legal beneficiaries such as their spouses and children, unless they change their wills so that they specifically state that they wish the laws of their own countries to apply.
Dan Harris, a senior associate in the trusts and estates team at the law firm Stone King, told Third Sector that charities stood to benefit hugely in countries such as France, Belgium, Holland and Germany, but that they must educate their donors in countries such as Spain and Italy to make sure they elect to have their wills interpreted under UK law.
"It won’t be any more difficult to leave a legacy in Spain, but you must make sure your donors jump through the right hoops to make sure it happens," he said. "This is the biggest change to EU succession law since the Romans. It’s a huge issue – both an opportunity and a threat."
The UK, Denmark and Ireland have all opted out of the law, but Harris said the new law would still apply to all British people who had property in other EU jurisdictions.
"I know multi-jurisdictional EU legacies are troublesome for charities because they are often tricky to realise, but under the new regulation it should be a bit easier," he said. "And the values should be greatly increased if charities invest time and money in educating their donors about the new rules."
Richard Radcliffe, a legacies consultant, told Third Sector he estimated that the rule changes could over the next 30 years lead to 3,000 legacies being left to UK charities by people living in France. This would work out at about 100 legacies a year, which would need to be shared between about 2,000 charities that receive legacy incomes. "I don’t think it will make a huge difference," he said.
According to the European Fundraising Association, legacies in France are worth about €500m a year, although these are mostly directed at charities located in the country.