Lost in translation

On 1 November 2021, a second paragraph was added to article 913 of the French Civil Code, which reintroduced forced heirship in estates dealt [with] under a foreign law which does not have a forced heirship equivalent, by creating a ‘right of compensation’ (in French ‘droit de prélèvement compensatoire’ (DPC)) for reserved heirs disinherited under the foreign law. 

Under the European Succession Regulation (ESR, or Brussels IV), which France is bound to apply, a person can opt in a will for the law of their nationality to apply to their worldwide estate, including their French assets. For many British nationals, who customarily prefer to leave their worldwide assets to their surviving spouse with children potentially inheriting on second death, this was a godsend. It allowed them to proceed with full testamentary freedom and bypass the rigid French forced heirship system, especially where forced heirship would result in a surviving spouse and their stepchildren jointly owning their home, which is never an easy situation even if the family gets along. The ESR became especially useful for British nationals living in France, as without such a choice of national law in their wills, French law and forced heirship would likely apply to their worldwide estate, including assets located outside of France.

With the introduction of the DPC, considerations will need to be made if the testator or one of their children resides (or plans to) in France or another EU country, or holds / plans to hold nationality of one of the EU countries. It appears from the drafting of the DPC that it will not matter if the children wishing to claim their forced heirship rights do not live in France or an EU country or do not hold EU nationality, as long as their parent or one of their siblings does. While the proposed scope of the new law is limited to the French assets, meaning that assets located outside of France will not be taken into account to calculate the amount due to the child or children making a claim under the DPC, those assets will not be entirely safe and there could still be severe consequences if, in order to pay the compensation, the surviving spouse loses their savings located in France or a share of their French home. ‘Choice of English law’ English wills will – in some cases – simply lose their efficiency as a means to protect the interest of the surviving spouse above and beyond what French law provides, or as a way to disinherit a child.

This has caused concerns for British nationals who own assets in France. So, we have put together the following FAQs to clarify things as much as possible until notarial best practice develops. 

Frequently asked questions

Will the new law apply to me / my estate?

There is a double application criteria for the application of the new French law:

• you (the deceased) or at least one of your children is habitually resident in or is a national of any EU country, and
• the law applicable to your estate does not have an equivalent to forced heirship.

For British nationals, it is commonly agreed that the possibility for children to make a claim on an estate under English law is not equivalent to forced heirship. Therefore, in estates where the applicable law is the law of England and Wales, only the first criterion needs to be fulfilled for the new law to apply, and the death must occur after the entry into force of the new law.

Does the date of my will matter and should I amend it to refer to the new law?

No, the date on which you made your will is not taken into consideration to determine whether the new law will apply, as long as the criteria are met. The date of your will, however, will still matter as far as determining which law applies to your estate. There is no need for your current will to be amended, as the DPC will apply as long as the criteria are met. However, if you believe that your estate will meet the criteria and that one or more of your children is likely to want to make a claim under the new French law, you might want to consider making a specific legacy to them in the will, to avoid them making a claim on your death and potentially causing a costly and stressful dispute.

Does the new law mean that ‘choice of English law’ (Brussels IV / ESR) wills are no longer valid?

No. A formally valid English will continues to produce effects in France under the Hague Convention on the international validity of wills, even if its contents are in breach of French forced heirship. However, in practice, its effect will be limited by either forced heirship or the DPC. 

Will there be a need for my beneficiaries to prove how many children I have when I die?

With the introduction of the DPC, notaires will have a legal duty, first to check whether, on the date of death, the deceased has a child habitually resident in the EU, or who is a national of an EU country (which will trigger the application of the DPC); and, secondly, when all the application criteria are met, to inform all children that they are entitled to make a claim under the DPC.

In the absence of formal documents recording the number of children a person had during their lifetime, it is likely that it will be deemed best practice across notaires’ offices to instruct a genealogist in all estates where the application criteria are met (the costs of which – around €1,000 for straightforward estates – will have to be paid by the known beneficiaries). 

Will a tontine clause still work to protect my surviving spouse?

Yes, a tontine clause will remain an effective way to ensure that your surviving spouse (or partner, whoever the surviving owner is) receives the full ownership of your French property on your death. This is because when a property is purchased ‘en tontine’, on the death of the first owner it will be deemed that the property was always solely owned by the surviving owner, from the date of purchase (except for inheritance tax purposes). The deceased’s share in the property will therefore not be considered to form part of the estate on which the DPC will be calculated, though see below in terms of how to pay out the sum due under the DPC when there are no cash assets available. 

Bear in mind that a tontine can be contested, but this would involve court proceedings and a very specific set of circumstances to be successful. 

Will a Société Civile Immobilière (SCI) protect my assets from a claim under the DPC?

No. SCIs used to be popular to ensure that the surviving spouse could inherit the French property before the entry into force of the ESR, because SCI shares are moveable assets, which if you are domiciled / habitually resident in England are governed by English law. However, the DPC has been set up especially for scenarios where a law other than French law applies. SCI shares will be considered to be French assets for the purpose of the DPC and therefore taken into account when calculating the value of the claim. 

Will my children automatically benefit from the DPC?

The DPC is statutory in that you cannot prevent your children from making a claim, however they will not be forced to do so under French law and they will not automatically inherit a share of your estate. When informed of their right to make a claim under the DPC, your children can say that they are not interested and that they are happy for your chosen beneficiaries as set out in your will to inherit. This will be recorded as part of the French estate administration process to ensure that they cannot then change their mind in the future. 

Will my children be entitled to own a share in my French property?

It depends on the composition of your estate. What is going to happen in practice is that the notaire will attribute a value to all assets within the scope of the DPC (for instance, assets located in France except properties passing under a tontine) and then calculate how much the claiming child is entitled to receive as a monetary value. It will then be up to the beneficiaries under the will / executors to decide how to fulfil the amount. This could be done by  giving cash or specific assets, or selling assets if not enough cash is available. In practice, if the only asset available is the French property, then the claiming child would be entitled to a share of it, unless it is sold to pay them off. 

 

If my children are entitled to a share in my French property, can they evict the survivor or force them to sell anything?

In principle, yes. Under French law, if a property is owned ‘en indivision’ (which it will be if a child inherits a share of it further to making a claim under French law) then any owner is entitled to apply to the court to force a sale of the property. In practice, a French judge will consider the practical circumstances of the case and can on balance decide that the harm / loss caused to the surviving spouse living in the French property by a forced sale is too significant and so refuse to make an order for sale. Occupying the French property would not be sufficient to cause a judge to refuse to order a sale, and there would need to be additional circumstances (for example, the fact that an owner [to take into account] was physically running a business from the property, or the fact that the surviving spouse was elderly, were both considered circumstances warranting a delay in issuing an order for sale). 

In terms of forcing the sale of other assets, if the surviving spouse does not want to share assets with the claiming child, funds will have to be found to pay them what they are entitled to receive under the DPC.  

Will my assets in the UK be affected by this new law?

No, in that they will not be taken into account in principle to calculate the amount the claiming child is entitled to receive, as the scope of the DPC does appear to limit the right of claim to the French assets only. However, if there are insufficient cash assets to satisfy the claim in France or the surviving spouse is not willing to share the ownership of the French property with the claiming child, then they might need to dispose of assets located in the UK to pay the child their due.

Is there a way to agree before my death that my children will not make a claim on my estate under the new law, for peace of mind?

In principle, under French law you are not allowed to agree with your beneficiaries, in advance of your death, how your estate will be distributed on your death. One of the few exceptions is a very solemn deed called a ‘Renonciation Anticipée à l’Action en Réduction’ (RAAR) under which a child, in full knowledge of their forced heirship rights, agrees during the lifetime of their parent not to make a forced heirship claim, should their parent have left assets to other beneficiaries above and beyond the available share of the estate (in breach of forced heirship). 

However, because the RAAR is a very limited exception, it cannot be used or interpreted as also working for the DPC, and therefore at this stage there is no possibility under French law for a child to agree during the lifetime of their parent that they will not make a DPC claim. 

I am reading everywhere that this new law contradicts EU law – can it actually be enforced?

For now, and until there is a court decision to the contrary and the law is formally repealed, it is enforceable. If the law has been repealed by the time you die, then it will not be applied to your estate.