Since the outbreak of Covid-19 and we were asked to ‘Stay Home’ property firms have found an increase in Brits searching for homes overseas.

In retirement, many people consider buying a home in Europe to either live in or have as a holiday home. But what happens when someone dies and/or has property and assets in another country? Who inherits the estate?

In the UK, in cases where there isn’t a Will under the laws of England and Wales, their estate is divided in accordance to one’s entitlement under the Administration of Estates Act (1925) which determines the order or entitlement as:

  1. Spouse/ Civil Partner
  2. Children
  3. Parents
  4. Brothers/ sisters of whole blood
  5. Brother/ sisters of the half-blood
  6. Grandparents
  7. Uncles/ aunts of the whole blood
  8. Uncles/ aunts of the half-blood
  9. The Crown

In cases where a Will is known or can be found generally sets out who inherits the estate. In England and Wales, testamentary freedom provides individuals with the freedom to choose to leave their estate to whomever they choose in their Will; without legal obligation to provide for any particular family member.

However, other jurisdictions have laws which take a more defined approach. Countries such as Scotland and most European nations including favourite destinations of British buyers – France, Spain and Portugal – have different variations of forced heirship. This ensures that next-of-kin will be provided with a minimum level of protection as they are guaranteed a portion of the estate.

For example:

France
In France, depending on the number of children, a certain portion of the inheritance must be set aside. A foreign resident in France who hasn’t specified in a Will that they want the laws of their country of nationality to apply, then French inheritance law will automatically apply.

Spain
Spanish inheritance legislation requires you to pass on your assets to your spouse and your children. The Law of Obligatory Heirs reserves 50% of all joint property for your spouse. Industry estimates suggest that well over 50% of non-Spanish owners of Spanish properties have either failed to make Wills in Spain or have failed to update these documents in line with their actual wishes.

Portugal
In Portuguese inheritance laws are consistent throughout the whole country. Portugal follows forced heirship rules; this states that ‘legitimate heirs’ (spouses, children, parents etc.) are entitled to a minimum of 50% of the deceased’s estate. However, if there is more than one legitimate heir, this portion usually increases to 60%.

According to Director of specialist expat financial planning, Jason Porter for International Advisor, Spain and Portugal allow a level of flexibility to other nationalities. British intestacy laws would apply to a Spanish estate where the deceased was a British national owning UK real estate at the time of death, and so forced heirship would not apply. Similarly in Portugal, the intestacy law are applicable to the individual’s nationality at the time of death and so eliminates forced heirship.

It can be challenging putting together an estate plan for someone who might live and own properties in multiple locations with different legal systems. Those buying a house abroad, even if there is no intention to live there, should always consider who might inherit it upon death.

Fraser and Fraser provide specialise research and support services to the legal professions by tracing missing heirs and beneficiaries to unclaimed estates worldwide. We have built up a network of European offices including France, Italy and Poland and we have developed partnerships and working relationships with professional genealogists around the world.

We’re happy to answer any questions, please get in touch or call us on +44 (0) 20 7832 1400.