Inheritance and succession rules in France

Success can often mean choosing the simple option. Inheritance and succession rules can be overwhelming as there are so many of them in France but I look for what gives the simplest outcome for clients.

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Lawyers may advise on what can be argued, meaning a long drawn-out court case will get the desired result, but a solution that is well tried and tested is usually the best option.

When you are trying to straighten out your affairs, so that you can get on with life, do you want a solution that means that you or your spouse could have a protracted legal case in a foreign country?

Most probably not.

The problem is that not all lawyers think that way. A long legal case never did them any harm!

Many people will say it is easier now, the new EU law Brussels IV deals with everything; like a wonderful sprinkle of pixie dust.

Yet some professionals will advise you that it will not work for UK nationals, because the UK did not sign the legislation and it does not apply to them... This is not true.

It is based on where the individual lives and not nationality, thus it applies to so-called ‘third countries’, like the UK.

But what is Brussels IV?

Brussels IV essentially lets you choose the succession rules of the country of your nationality, not the country where you live. If, for example, you are a UK national, there are no succession rules in the UK, so this must be the simplest solution!

Certainly, Brussels IV must not be discounted out of hand, as for some, (usually those with more complicated objectives) it is the best solution, whereas for others it can create unnecessary uncertainty.

Why is there uncertainty?

One of the big issues is that, if Brussels IV is based on residency, a French court is going to have to deal with the laws of many different countries.

French courts are very able and competent when it comes to French law, but it would not be unreasonable to argue that they may not be fully equipped to deal with the laws of the rest of the world. This gives the possibility of complications for the surviving spouse / beneficiaries.

This is not necessary for those with simple situations; for example, those married with children from the same marriage. They could:

• Simply change marriage regime, under French law (ultimately under international law) this ‘could’ be the simplest solution (depending on what the spouses’ wishes are, of course).

• Using a law that has been enshrined in French statute since 1966 (1526 of the French civil code) and used effectively over this time is far less risky than the use of a relatively new piece of legislation which relies on a French court referring to, and fully understanding, the laws of another country.

• There are, of course, other solutions, such as the tontine clause (clause d’accroissement) if all you want to do is cover the property.

• Money can also be protected from succession rules, with the use of a French compliant assurance vie. French compliant, in this case, means that it must have a beneficiary clause, permit­ting assets to be paid directly to the beneficiaries outside of the estate, controlled by a fiscal representative.

• There is also the possibility of leaving the life interest of assets, known as the usufruit, put in place using a simple French will.

The point is that one, or a combination of these solutions, may provide the ideal solution, without the worry as to whether the EU law will be effective.

One must also remember that Brussels IV only deals with successions rules.

It does nothing whatsoever to mitigate inheritance tax, which can be as high as 60%.

We often advise people that “when in Rome, do as the Romans do”, this means not simply sticking to Anglo-Saxon thinking, which is great in the UK, but often ineffective in France.

This column was written by Robert Kent of Kentingtons financial advisers.