France's amended forced-heirship law may conflict with EU Succession Regulation
The law could create new uncertainty in estate planning for international individuals with French links, according to Joseph Austin TEP, Senior Associate at law firm Kingsley Napley. Austin notes that the law’s effects could be controversial because it conflicts with EU succession law, which would normally override the French legislation.
The amendment has come about because certain elements in the French legislature consider that EU rules, obliging French authorities to apply the succession laws of another jurisdiction in some circumstances, are too far-reaching. ‘The particular concern seems to be that an international individual with French links might wilfully circumvent the forced heirship rules that guarantee a portion of the estate to the deceased's children,’ says Austin. Under EU law, they could do this by electing for their worldwide estate, including its French assets, to be dealt with under the law of the country of their own nationality. Alternatively, if they were habitually resident in their home country at their death, that country's succession law would again apply to their worldwide estate.
But, following the amendment, this will no longer be entirely true. According to Diane Le Grand de Belleroche TEP of Paris law firm BeFair Avocats, from 1 November 2021 the relevant article of the French civil code will read as follows:
'When the deceased, or at least one of his/her children is, at the time of death, a national of a Member state of the European Union or has his/her habitual residence there, and when the foreign succession law does not know a mechanism with a reserved portion protecting the children, each child (or his/her heirs, or those who benefit from his/her rights) can use the assets which are located in France to obtain compensation at the time of death, in order to benefit from the forced heirship rights which they have under French law, within the limits of these rights.'
England and Wales could be one of the jurisdictions that this amendment is seeking to protect against, as its nearest approach to forced heirship, the Inheritance (Provision for Family and Dependants) Act 1975, may not provide enough protection for the deceased's children to satisfy this new French rule, according to Austin and Le Grand de Belleroche. Cases are likely to appear where EU succession law will dictate that England and Wales law should apply, but the French rule will differ, allowing the French authorities to reallocate French assets so that the deceased's children receive as much as possible of the French-reserved portion of the estate.
The UK’s exit from the EU may protect UK residents' estates from some of the effects of this law, but it will undoubtedly apply to other EU Member States, according to Austin. However, EU succession law, which dictates a different procedure for determining the administration of an estate, would normally override the French legislation. ‘This will, no doubt, come before the French courts,’ says Austin. ‘It remains to be seen how they, and if necessary, the EU courts of appeal unravel these inherent conflicts.’
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