There have so far been no legal cases to challenge or clarify the 2021 French law which gives forced heirship rights to children where a foreign legal system was chosen to apply to the will, lawyers said in a webinar yesterday (March 3).
During the session, organised by the Franco-British Network, Bordeaux barrister Simon Deceuninck said the new law raises many questions as to exactly how it should work which remain to be clarified.
“We are having to guess at the moment, until we have some definitive case law about the matter,” he said.
“This reform and new levy, is just as constraining as it is uncertain.”
The French law applies where the deceased or their children live in France or the EU or are EU citizens, and where the deceased chose a foreign legal system, such as England’s (as is allowed by an EU regulation in force since 2015) which has no forced heirship rules and they did not leave their children the portions provided for by French law.
The law says notaires should tell them they can be compensated out of any French assets in the estate.
Impact on Britons and Americans ‘unfortunate side-effect’
Lawyers at the webinar stated that the French legislators’ aim had mostly been to target the problem of daughters receiving lesser shares in Sharia law, but it was now “an unfortunate side-effect” that many people are now affected due to having chosen Common law systems, such as those of England or the US.
Mr Deceuninck said issues being debated by lawyers include whether or not (for a French resident) the children’s reserve rights should be worked out based on worldwide assets or just French assets, though he said the most mainstream view, including from the Cridon network that advises notaires on international issues, is that it is the worldwide estate.
He added: “Really this reform is likely to be considered in breach of the EU regulation because it violates a fundamental principle of EU law which is that EU rules have primacy over national rules.
“I think it’s likely that in the relatively near future it could be scrapped by an EU or French judge, or maybe some day the legislators will realise they made a mistake.”
He said it is not easy to find solutions to the new rule, stating that one option could be creating a foreign company to own your French property, so it may be legally deemed to consist of shares located outside France.
Effect likely to depend on relationship with children
Christophe Dutertre, a notaire specialising in international inheritance issues, said the impact will depend on the relationship between children and parents.
“The children will have the right to refuse to make a claim, and if there is a good relationship with the parents they may be happy for the surviving spouse to inherit and they will inherit after the second death, for example.
“The situation might be different if you have children from a previous marriage. If the children accept that their step-parent receives the full inheritance, they don’t necessarily have any guarantee they will inherit anything after the second death.”
He added: “The main question causing a lot of problems for lawyers is how to calculate the rights. No one has a good answer to it, but we have to rely on precedent, workshops and expert’s articles.”
He confirmed there is some debate as to whether (for French residents) they should calculate the children’s rights based on French-located assets, or worldwide ones.
“One client might have a million pound property in London and live in the French countryside with a €100,000 property. The question of compensation is quite difficult. But the Cridon, which deals with questions for notaires, told us that they think we should take account of the worldwide estate.
“Some clients are saying, ‘well, we’re going to move our assets back to the UK,’ but actually, though the UK assets can’t be touched, they may be taken into account to calculate the children’s rights over the French assets.”
He gave the following example, worked out according to the most widely accepted view of how the law should operate:
Mr Smith dies in France with one spouse and two children from a previous relationship. He chose UK law and left everything to his wife.
He had a €250,000 French property, UK flat worth €400,000 and a UK bank account with €50,000 and French, €50,000 = €750,000.
With two children, the réserve is two-thirds, which is €250,000 each.
The French estate is €300,000, not enough to compensate in full. The compensation should therefore be pro rata out of the value of the assets in France, so €150,000 each.
He said there is some argument over whether the children could also attempt a court case to claim more (out of worldwide assets), but this is uncertain. The Connexion notes, however, that the French law itself states that “the children can make a compensatory levy out of goods situated in France on the day of death”.