New French law protecting forced heirship rules

Since the EU Regulation No 650/2012 on international successions, which came into force on 17^th August 2015, it is possible for British nationals, who are mostly connected to England, to elect English law in their will to govern the devolution of their whole estate including their assets located in France.

Many British nationals residing in the UK or in France have done so to avoid passing their French assets to children before their spouse or simply to disinherit them.

It was judged in a previous French case law of 27 September 2017 (judgment no 16-17.198) that such election of a foreign law excluding children from the succession was not considered to be against French international public policies and therefore admissible.

However, a new French law no 2021-2019 of 24^th August, which will come into force on 1^st November 2021, provides a new twist in cross-border inheritance planning between England & Wales and France and other jurisdictions which do not have forced heirship rules.

The new law includes an article 24, I, 1°, which completes article 913 of the Civil Code with a new paragraph re-establishing a right of compensatory levy (droit de prélèvement compensatoire) on property situated in France for the benefit of children who would not receive their reserved share of the inheritance under French forced heirship rules. The article states that where the deceased or at least one of his children is, at the time of death, a national of a Member State of the European Union or habitually resident there and where the foreign law applicable to the succession does not allow for any forced heirship mechanism to protect the children, the children or their heirs, whose reserved rights have not been respected, can claim a compensatory levy  on the existing property located in France in order to be restored of their reserved rights under French law.

This new law will apply to deaths occurring from 1^st November 2021 and will include life-time gifts granted by the deceased prior its entry into force.

A new paragraph has been added in article 921 of the Civil Code, which reinforces the notary's obligation to inform the beneficiaries, whose reserved rights have been affected by a gift made by the deceased, of their right to request the reduction of the gift exceeding the reserved share they should have received under French law.

This new right for children to claim their reserved rights only applies if the deceased or one of his children is, at the time of death, is a national or habitual resident of an EU Member State and will be limited to assets located in France.

Therefore, the above new law will not apply to a British deceased residing in the UK and whose children are residing in the UK at the time of death.

For those falling under the new provisions (e.g. British nationals or whose children are residing in France) and have elected their national law in their will to avoid French forced heirship rules, it will be necessary for them to consider alternative estate planning strategies in the future (e.g. matrimonial regimes, tontine, restructuring assets, etc…).

Nonetheless, this new law leaves several uncertainties on its application and its compatibility with the provisions of EU Regulation no 650/2012 on international successions, which allow a testator to elect his national law to govern his estate as a whole.

Furthermore, the law is targeting foreign laws who do not have a mechanism to protect reserved rights of the children. Although it is generally admitted that in England and Wales, you can leave your assets to whoever you choose too, children can still make a claim against the deceased’s estate under the Inheritance (Provision for Family and Dependants) Act 1975, if their deceased parent failed to make reasonable financial provision for them in their will or under the intestacy rules. The courts will assess the children’s claim under different criteria such as their financial needs and resources and the size of the estate. Such claim can be made in England & Wales if the deceased is domiciled there (common law domicile). This English law protects a needy beneficiary who may well succeed, depending on the circumstances.  Can this be regarded in France as a legal mechanism to protect reserved beneficiaries?

If you need advice on cross-border inheritance planning between the UK and France or need a review of your existing wills or you are in the process of purchasing a property in France, please contact Loic Raboteau at loicr@bandmlaw.co.uk .