Inheritance law changes: how you will be affected – and when
SIGNIFICANT changes to the way that inheritance law is applied to expats living in France are under way.
As reported in The Connexion last month, the adoption of a new EU regulation will allow people resident in France to write in a French will that they want the law of their nationality – and not French inheritance law – to apply to their estate.
This enables them to bypass existing restrictive French rules governing to whom you can leave your estate.
However, as the UK has not opted in to the new regulation Britons living in the UK but with holiday homes in France will not benefit.
Connexion has received considerable feedback on the topic from readers. Here we answer some of the questions we have received.
WHAT exactly does the new EU regulation do?
IT simplifies cross-border inheritance matters. Its effects in countries applying it will be twofold. Firstly, it states that the new default rule will be that the law of the country of last residence applies to the whole estate.
Secondly, it allows residents of a country applying the regulation to opt in a will for the law of the country of their nationality to apply to the whole estate. It is this latter rule which will benefit such people as Britons living in France.
French laws oblige residents to leave a “reserved” minimum to children – half to an only child, two-thirds to two children and three-quarters to three or more children.
This is excellent news. What are the precise timings involved?
The regulation was adopted by the European Parliament in March and is set for final adoption by the Council of the European Union.
A council legal affairs spokesman told Connexion: “The council is certain to adopt the regulation in its current form.” The council said in a statement that final adoption was “most likely to take place before the end of the Danish presidency” – which is the end of next month.
The regulation will “enter into force” 20 days after final adoption but will not apply in practice until after 36 months (until then, current inheritance laws are applied).
It will be directly applicable in all EU states apart from Denmark, which has an opt-out in such matters, and the UK and Ireland which did not opt in to the proposal.
So, we can’t use it yet?
The regulation will enter into force at the latest next month or in July and would take three years before it was applicable, so summer 2015.
There is nothing to stop you making a French will now, including a clause saying you want “UK law” to apply to your whole estate. The council spokesman said this would be the correct wording, as the UK is the member state as recognised by the EU. Which law out of English, Scottish or Northern Irish is appropriate would be decided when the succession is dealt with, on the basis of rules set out in article 28 of the regulation (which include a test relating to which country the deceased had the closest connection).
There is nothing to stop you aiding the process by specifying you were born / brought up in / lived in a certain country, avocat Gerard Barron of Boulogne-sur-Mer said.
Note that while English and Northern Irish laws do not force you to leave set amounts to certain relatives, Scottish law requires you to leave a portion of moveable assets to a spouse and children.
English law does, however, allow a possibility (rarely invoked) that people who think they have been unfairly left without proper provision for maintenance, education or advancement in life may take legal action to seek a share.
Should you die after summer 2015, the wording in your French will would take effect, said François Trémosa, a notaire with the Groupe Monassier in Toulouse, who helped draft the original proposal that sparked this EU regulation in 2009.
Mr Barron said that, for added peace of mind, you could add a codicil to the will after the application date, confirming the validity of the dispositions in the will.
If the UK is excluded, why should this benefit Britons in France?
The council spokesman, after consulting legal experts, confirmed that Britons in France will benefit because France has adopted the regulation. It applies because they are resident in France.
The other side of this is that French people who live in the UK will be unable to opt for French law to apply to their whole estate – as the UK is not included.
Are Britons living in France currently subject to French rules on worldwide goods?
Potentially, yes. For a person who dies as a French tax resident, the basic rule is that their moveable assets (shares, money in banks etc) and their French real estate are subject to French succession law.
The position for non-French real estate is more complex. French private international law (that is, rules on whose law applies in cases with a foreign element) accepts that it is passed on according to the law of the place where it is situated (ie: English law for English assets).
However, Mr Barron said French lawyers may still consider your estate as a whole.
If, for example, your choices in bequeathing English property break the French rules on how much of the whole estate should be left to whom, he said it was possible that an heir who “lost out” could seek to be compensated out of other assets that the French courts do have control over (eg: ones in France).
For people resident outside France only their real estate in France is subject to French succession law under the current rules.
What is the position for Britons living in the UK and who have second homes in France?
Because the UK is not opting in, France will treat it as if it were not an EU country for the purposes of the regulation: therefore it will continue to apply its own law to French holiday homes of UK residents.
Is it possible that the UK could still opt in to the regulation?
It is possible, but there are no signs that it is likely to. The spokesman said it is thought the UK wants to avoid French rules, such as “reserved” heirs demanding shares, applying to UK properties.
Can non-EU nationals like Americans in France make use of the regulation?
A spokeswoman for the European Commission, which drafted the original version of the regulation and will enforce its application, said: “In the future succession regulation, as the text stands today, the rules on applicable law are of universal application, which means that a US citizen living in France may choose the law of his or her nationality (US) to be applicable to his succession.”
I’ve heard this could especially benefit people such as those with stepchildren – why is that?
Under the current rules, say if you have three of your own children from a former marriage and three stepchildren in a current relationship, French rules would require you to leave three-quarters of your estate to the first three, as it does not recognise stepchildren as having any specific rights. One remedy is to adopt the stepchildren, but this is not possible if you are British and the stepchildren are aged over 18.
How do I make a will?
There are several kinds. The simplest is the testament olographe, written in your own handwriting, signed and dated (witnesses are not required). It is preferable to number and initial the pages. It should begin “this is my last will and testament” and contain clear dispositions such as “I leave my house to my son, Richard” (not “I’d like to leave” etc).
It can be written in English.
For peace of mind you can get a notaire to check it, and it is also possible to have a notaire register it, so as to be certain it will be found. The Connexion’s inheritance helpguide, priced €7.50, lists other kinds of wills. See below to order a copy.
In the event that a Briton dies in France and had opted for UK law, does this mean UK courts will deal with their succession?
No. The Council of the EU said that French notaires and courts would deal with it, but applying UK law.
Does the regulation have any effect on French inheritance tax matters?
No, that is outside its scope: taxation rules remain as before. While it would, for example, allow an English married person resident in France to leave their whole estate to an unrelated friend, this would still be subject to French inheritance tax at the maximum 60% rate.
Can you direct me to more information?
See the statement at www.tinyurl.com/CouncilPressRelease
* Connexion publishes a helpguide on French inheritance law which can be downloaded at www.connexionfrance.com for €7.50. You can order a printed version – price €9.50 – on the site or call Nathalie on 06 40 61 71 97. It sets out rules on inheritance (including tax) and explains strategies to help you achieve your wishes. It has been updated with the new rules.
