I always remember someone saying to me: “I love France but I have never spoken about dying quite so much as I do since I got here!”
I knew just what they meant: French inheritance and succession law is complicated and so often wings its way into conversation in those wonderful warm soirées.
The issue is that this is hardly the place to do this. First, because France is such a beautiful place, it is, in my opinion, better to have more uplifting and fun conversations.
Secondly, because everyone’s situation is different and so what is good for the person you are chatting with might not be good for you.
Indeed, they might lead you to disaster.
This is the French equivalent of “a bloke down the pub told me…” (BDP syndrome). Wine and wisdom do not always mix!
What led me to discuss this are the issues created from said syndrome, which led the surviving spouse of a couple I served with a messy situation.
When we originally met, they stated they had several children, all from their marriage, and that their main objective was to protect the surviving spouse. They wanted their children to ultimately get their estate, but only when they had both finished with it.
I suggested that they consider a change of marriage regime to communauté universelle (universal community) with a survival clause and that this would need to be discussed with a notaire, to get legal guidance and draw up the contract. A change to community meant that when one of them died, everything would automatically pass to the survivor, in full ownership, with nothing (yet) passing to their children, with no accountability to them. Within a couple of weeks, they sent me a copy of the act, confirming it had all been done.
Many years later, that being fairly recently, I was advised that one had died. Clearly a poignant moment, for I had served and known these kind people for a long time.
At least I was confident that all was well with their inheritance planning. Or so I thought.
Sadly, the couple had been to a nice soirée and then did something drastic, while not asking for counsel or even informing their adviser (me).
They had been told by a knowledgeable person at the soirée (bloke down the pub) that they should do a will using Brussels IV. This means that you can sidestep French succession law.
This is true, but this was interpreted by them as treated under UK rules, thus meaning UK inheritance tax in place of French inheritance tax, which is not the case (succession law and tax are different issues).
The point is that changing marriage regime achieved what they wanted, and in the best way possible. No more action was needed.
Here is the big problem. They had a marriage regime change which placed the joint assets into a community, which is actually outside of the estate of the couple. There is now a UK will citing that UK law applies to the estate.
If the estate it is covering is arguably empty, what does this do?
If the marriage regime is universal, it usually covers the whole estate, though technically it is possible to exclude things. For the sake of comprehension, let us say that everything is joint.
As is common with marriage regimes, the contract said that it applied exclusively to “biens situés en France” (goods in France).
Generally speaking, UK assets that are not buildings are treated as in France, because the UK/France succession treaty states that only UK-situated buildings are under UK rules, with the rest under French law. We now, however, have a conflict, because there is a UK will asking for UK law to apply, so how does that work? Spoiler alert: it does not!
This is like buying two cars and then attempting to drive them both at the same time. It is simply not possible – you can only sit in one car at a time.
Had my clients left the marriage regime as the only solution, the only thing the survivor would need to provide the notaire is a death certificate.
The technical legal reason for this is that the survivor is deemed to have always been the original owner, since they were part of the community.
Now there is only one person left, so it dissolves, assuming they are the full owner. The death certificate is just so the name can be removed, and there is no actual transfer of assets per se.
As it is, my client has been asked for a list of things covering several pages and has asked me why it is all necessary.
The notaire is trying to work out what is in the community, what is under UK law, and needs evidence of each asset and value. It is now a total mess, courtesy of the soirée/bloke down the pub.
Read more: Will Brexit affect our inheritance choices?
Had the client approached me or any suitable professional (thus, one qualified and based in France) before doing a will under Brussels IV, they would have learned that:
1. You are better off as you are, since it is the simplest solution to achieve your goals;
2. If you insist and want Brussels IV, you need to redo your marriage regime, going back to
separate estates to avoid any conflict;
3. That will be expensive and difficult to do. Anyway, review point 1.
All this is not to say that Brussels IV is a bad idea for everyone.
The bloke down the pub may have had child-ren from a former marriage, making a marriage regime change almost impossible, so this was a good option. The fact that his estates were already separate meant no conflict, so actually fine for him and his wife, just no good at all for my clients.
Of course, it could happen the other way around, which I also see. So, the couple meeting the bloke down the pub, with the marriage regime are more convincing and persuade the guy to ditch his Brussels IV and set up a marriage regime. He should not be able to do that, but the notaire did not check the children situation (it is a legal obligation, but it happens fairly frequently for non-French nationals).
The chances are, when the first person dies, that this all falls to pieces, since it is bound to cause issues for at least one or more of the potential inheritors, who are protected by the French constitution (as the sidestepping utility of Brussels IV, which is useful in this case, has been lost). Another hot mess.
In conclusion, I see three routes for dealing with your own situation:
1. Go to law school and study French civil and fiscal law, UK inheritance law, Brussels IV (so EU law), international tax treaties and the Hague Convention (so international law). Make sure you gain a good understanding as to how all these work together or conflict, so you can avoid any problems;
2. Go and see the Bloke Down The Pub or, alternatively, go into complete denial and ignore that there may be an issue (this option is quite popular). I see expensive lawyers/notaires and courts in your future (or at least for the survivor of you);
3. Get some professional advice relevant to your situation. If you live in France, that means taking French advice from a French-qualified person or company – not the bloke down the pub.
This article was written by Robert Kent of Kentingtons