'Impossible decisions' for us, say notaires

A Paris notaire with expertise in international legal issues, Marc Cagniart, said a lack of court rulings had been creating a dilemma for notaires.

He said that in his view the 2021 law is unlikely to be enforced by courts where the deceased left a substantial inheritance for each child, even if the proportions are not exactly as those defined under French law.

“But where the conditions of the new law are met, the problem is what to do when we find ourselves being expected to apply this compensatory levy, while it seems to be contrary to EU law.

“The notaire will find him or herself between a rock and a hard place. In the legal hierarchy, he or she should normally prioritise EU law.

"The notaire will have to explain the situation and we won’t know how the heirs will react.

"If one is more protected by French law, they might want that; if another is better off under EU law, they may want that instead.

"There could be a dispute and that’s why, one day, we may have a decision by [top French appeal court] the Cour de cassation or the European Court which will say it’s EU law that applies. Until then, we are faced with a trap.

"If we apply French law but later a judge says the EU regulation should apply, we will have acted wrongly, but in the opposite case, we could be condemned for applying EU law.”

Notaires will hope that heirs agree among themselves, he said, but it will be “delicate” if one is being asked to give something up. Should an heir later regret it and feel the notaire encouraged them to abandon their claim, they might make a complaint against the notaire.

“We’re faced with a logical impossibility of resolving the problem while there is no jurisprudence.”

MPs who supported the law are known to have originally wanted to address the issue of girls receiving less under Sharia law, but notaires now say the law is likely not to apply to that situation but mostly to affect the choice of Anglo-Saxon laws, such as English or American.

This is because Sharia does contain reserved portions for children, however girls receive less than boys.

It is unclear if it will affect those choosing Scottish law, as this includes a 'reserved' element, though not including real estate, and only applicable where the deceased was resident in Scotland.

Mr Cagniart’s comments were echoed by lawyers in a webinar organised by the Franco-British Network.

Bordeaux barrister Simon Deceuninck said the new law raised many questions as to exactly how it should work which remained 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.”

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." 

He said it is not easy to find solutions to the new rule, stating that one option might be creating a foreign company to own your French property, so it may be legally deemed to consist of shares located outside France.

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: “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 any French assets."

At a glance when the new rules apply 

1. If the deceased – or at least one of his or her children – was an EU citizen or was living in the EU at the time of death and...

2. A foreign legal system is to apply to their estate (notably due to the EU regulation), and…

3. This foreign system does not include any forced heirship rules in favour of children, and...

4. The plan is to not leave property and goods according to France's reserved heirs system, and...

5. The forced heir/s agree that they want to apply the French rules

Example of the new law in action

Mr Smith dies in France with a 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, a €400,000 UK flat, a UK bank account with €50,000 and a French one with €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 to each child.