Inheritance issues in France

As many of you know, in 2015 the European Succession Regulation came into force. Sometimes known as ‘Brussels 1V’, this allowed you, if you deemed it suitable, to elect for the law of your nationality to apply to your Will in France. The principal benefit of this election would be to allow you to leave your property to your spouse for example, and then pass it on to your children after the second death. Another useful application would be when relationships have broken down and you have decided that one or more of your children should be excluded from benefitting from your estate. In effect, you claim the right to leave your assets to whomever you wish.
Now, in a quite frankly bizarre move, the French government has decided to move against European law. At the end of July this year a bill was passed making changes to article 913 of the Civil Code. Here is the relevant wording, with a translation ‘a la Google’.

Lorsque le défunt ou au moins l’un de ses enfants est, au moment de son décès, ressortissant d’un État membre de l’Union européenne ou y réside habituellement et que le droit étranger applicable à la succession ne permet aucun mécanisme réservé à la protection des enfants, chaque enfant ou ses héritiers ou successeurs amoureux peut bénéficier d’un prélèvement compensatoire sur les biens existants situés en France le jour de la sa mort, afin d’être rétablie dans les droits réservés qui leur sont accordés par Français loi, dans les limites de celui-ci.

Where the deceased or at least one of his children is, at the time of death, a national of a Member State of the European Union or is ordinarily resident there and where the foreign law applicable to the succession does not allow any reserved mechanism to protect children, each child or his heirs or successors may make a claim on existing property situated in France on the day of death, so as to be restored in the reserved rights granted to them by French law, within the limits thereof.

There is little scope for doubt that this directly contravenes European law. It has already been challenged once but was passed unchanged. It is likely that there will be a stream of legal challenges that could take several years to conclude. This is France after all. One silver lining is that the new decree will only come into force on the 1st November this year, and will only relate to deaths that occur after that date. For those of us who were contemplating this move, or have already employed it, this will mean that there could be years of uncertainty, and many people are not going to be able to leave their assets on death as they would wish to.

One key aspect of this change is that it can only be applied to assets situated in France which, in some cases, may affect succession plans for the principal residence and possibly French rental properties if no other planning has been put in place. There are tried and tested legal mechanisms in France for establishing property ownership that can better protect the survivor such as the ‘en tontine’ clause (only at the point of purchase), the marriage contract of ‘communauté universelle avec attribution au dernier survivant’, the ‘pacte de famille’ and the ‘donation entre époux’ to name a few.  If you have any concerns about how this new change may impact your existing Wills and estate planning, I recommend that you speak to a Notaire to discuss your options.