Video update: March


BACKGROUND INFORMATION

Text of previous article as originally published in October 30, 2013 about inheritance law changes in France:

Many people owning (or thinking of buying) property in France will be aware that French law currently governs the taxation and devolution (who gets what when you die) of your French real-estate.

Many will also be aware that under current French law their French real-estate is subject to French forced-heirship provisions, which in practice means the French legal system will decide who receives your property when you die. Put simply, your Will is probably (at least partly) ineffective if it conflicts with the French forced-heirship rules.

The good news is that this is all changing in such a way that it could advantage British owners of property in France.

The key piece of legislation has the ‘catchy title’ of EU regulation 650/2012, otherwise known as Brussels IV… We’ll call it the ‘Regulation’.

Under the Regulation, since 17th August 2015, any British national who has property in France, or for that matter any participating EU State (and who has taken appropriate action before their death) can choose either the law of the country of their habitual residence, or the law of their nationality (or choose one of their nationalities if multiple) to govern the devolution of their French estate.

If they make no choice then the default position is that the succession of their estate will be governed by the State of their habitual residence.

NO SILVER BULLET

This may sound like a ‘silver bullet’ solution to the forced heirship provisions which currently thwart the ‘best laid plans’ of British Will-makers, but what many people are not aware of is that the new rules will only benefit those British nationals who have taken the appropriate action.

The ‘appropriate action’ is to make a nomination in a Will which is valid in France stating which law will apply to their property. This could be done in a French Will or, because in France (properly drafted) English Wills are valid, the nomination can be done in your English Will.

In fact, not only can a nomination be made now, it should be made now and I would go so far as to say that if you are having a new Will drafted in the circumstances described above, by a professional person and they have not included a properly drafted nomination, you should ask them why not?

What if, for example, the Will-maker loses the mental capacity to make a new Will either as a result of a degenerative condition or an accident? What if the Will-maker adopts a ‘wait and see’ approach and then forgets to make the necessary changes?

In both of these scenarios, the estate will not benefit from the new regulations which in turn could mean their French property may not pass to their loved ones, regardless of what it says in their Will.

Interestingly the Regulation does not restrict the choice of law to EU nationals, and so, for example, a Hong Kong Chinese national with property in France, could nominate Hong Kong law to apply to the succession of their property, a New Zealander could nominate New Zealand law, a Japanese, Japanese law, and so on.

Some readers may have heard that the UK, Ireland and Denmark have all opted out of the Regulation and so those readers may question whether the Regulation relates to British nationals. Well the opt-out simply means that it is not possible to make an election under ‘British’ law for ‘foreign’ law to apply in Britain to British assets, but it does not mean that Britons cannot make an election under the laws of participating EU States.

Another potentially useful element of the Regulation is that a European Certificate of Succession (ECS) will be issued by the country of the person’s habitual residence which will be recognised in all other participating EU States. This could be useful to say a Briton living in France who also has property in Italy or Germany because the certificate will be recognised in all of these jurisdictions; but it probably won’t help a person with sole British nationality who is habitually resident in the UK, because the UK opt-out means Britain will not be able to issue an ECS.

Only by taking proper advice from a specialist in international succession and probate law can those people ensure that any unwanted succession consequences are mitigated.

BEWARE OF THE TAX

Finally, I should mention that even after 2015 (as things stand now) a UK person will still need to obtain an English grant of representation to collect and distribute UK assets, and tax may also be payable on the French property, but the ability to nominate which law applies means that the possible ‘nightmare’ forced heirship provisions that currently exist in many EU jurisdictions, including France, can (after 17th August 2015) be a thing of the past.

Content written and provided by Dan Harris. Originally published in October 2013, updated in March. 

The author, Dan Harris, is an Associate Solicitor and a specialist in international succession and probate at Stone King LLP Solicitors . He can be contacted for further advice and clarification on +44 (0) 1225 326761

This article is for general information purposes only and does not constitute legal, or other professional advice. We would advise you to seek professional advice before acting on this information.

 

Related reading:

English v French domicile

One will or two?

7 Responses to “VIDEO UPDATE: Inheritance law changes in France”

  1. Avatar

    sevendaver

    I is my understanding that Forced Heirship only applies to residents of France. A non French person owning property in France and not a resident of France would not be victim to these laws.

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    • Avatar

      DanHarris

      Hello

      Thank you for your comment – but unfortunately the position you have stated is not correct –

      Forced heirship applies to anyone (regardless of their nationality) who owns property in France – whether they are resident in France or not.

      Moreover, ambiguity in the drafting of the new regulation means that, even after it’s implementation on 17th August 2015, the French property of a British national who is habitually resident in the UK will almost certainly still be subject to French forced heirship – unless the appropriate action is taken.

      This article above provides a summary of the correct position and the video is a shortened version of a training video I have completed for UK lawyers. It is also a simplified version of a webinar I completed for the law society in recent months – so hopefully you will find it helpful.

      I am aware that there is some misinformation on the subject in circulation – some of it from apparently reliable sources – but I have been able to contact most of the errant organisations and publications and they have subsequently changed their advice. However, if you are aware of any body that is still publicising a contrary view, please do let me know and I would be happy to explain the correct position to them.

      Alternatively if we can help you or any other reader with further clarification please don’t hesitate to call either me, Dan Harris, or my colleague Simon Lofthouse in the international unit at Stone King on 01225 337599 – or email us at international@stoneking.co.uk.

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  2. Avatar

    barbarafirth1@gmail.com

    Hi
    My partner and I and two friends have owned a property in France for 25 years. We have quarter shares each. My partner and I have two children and our co-owners – man and wife have no children. They wish to leave their half share to our children. Can they now do this if they have a will drawn up in France or will their wishes in their English will be enough?
    many thanks
    barbara

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  3. Avatar

    DanHarris

    Hello

    The new regulation will allow your friends to leave their share of the property to your children by will and the regulation has a provision for an ‘implied election’ by which it may be possible to argue that a will executed before the 15th August 2015 would be read as though an election were made, even if an election was not made.

    However, my clear advice is that your friends should not rely on this and should instead make a will with an unambiguous election for the laws of England and Wales to apply.

    If they need help with this we can draw up either an English will to cover their worldwide assets (which would be valid in France) and which would deal with all of the cross-border issues, or alternatively we can draft separate wills for them to cover their French assets – also with the necessary cross-border elements.

    One other point – as your children are not related to your friends any gift made to them (either during their lifetime or by will) is going to only have a tax free exemption up to 1,594 euros, after which the balance will be taxed at a rate of 60%.

    Kind regards

    Dan Harris

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  4. Avatar

    lizalou63

    My husband and I live and work in France. We have been renting but have bought a property which we move to in three months. We are very confused about our wills. Can you confirm that f we make a will in England with an English solicitor which covers our worldwide assets with a nomination to be considered under English inheritance law, would this will be valid in France? You mention that such a will should be “properly drafted”. Does this mean it should be a proper will under English law or do there have to be modifications made for it to be valid in France? Also would it need to be translated into French?

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  5. Avatar

    Richard-of-York

    French inheritance law is something to which I have not paid sufficient attention it would seem. My wife and I have our house in the UK ‘Under Offer’ and on completion of sale intend to go over to France in our Motorhome and look for our ideal home as cash buyers. My wife has a son from her first marriage, whereas I have no children. If we buy a property in France which will become our sole residence, would I, if my wife pre-deceased me, be forced to raise capital to the value of 50% of the property (as her share in the ownership) to pay my stepson the value of his inheritance?

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  6. Avatar

    appletree

    My mother has recently died in France where she lived near my brother. She made a will 30 years ago leaving all her estate between the two us us except so small bequests to grandchildren. Since she has lived in France my brother has managed to cut her off entirely from her family, (using violence against attempted visits) we had applied for a judge to appoint a third person to look after her welfare and assets but she died before this could happen. Her will is lodged with a solicitor in England and I have a copy. Will my brother have been able to dupe her into signing another will or usufruit and if so how does her original will stand up against this. My brother did not let me know of her illness and death as which I heard of through a third party.

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