From next month, UK nationals with a property in France will be able to choose which law applies to their estate, and Jean-Baptiste Masson explains the consequences
For many of you, buying a property in France is a dream – however, you should make sure that this dream doesn’t become a nightmare for your heirs.
Having found a property to purchase, the first step in the conveyancing process will be to contact a notaire who will assist with all the aspects attached to buying a property in France, including estate planning issues.
In this respect, in order to prevent any conflicts and to simplify the succession process, it is worth thinking about who will inherit the property at an early stage, and in any event prior to signing the final deed for completion of the purchase.
It is important to bear in mind that, contrary to the approach taken by common law systems, a testator is not free to leave a French property to whoever he or she chooses.
In actual fact, French law is the home of the réserve héréditaire, which is the statutory portion of an estate from which a testator cannot disinherit his or her legal heirs (héritiers réservataires). This applies mainly to a testator’s children, who are entitled to receive a portion of the deceased’s estate regardless of the circumstances. In the event that the deceased has no descendants, the spouse shall be seen as a legal heir.
When determining the reserved portion of a deceased’s estate, one must look at the number of children the deceased had.
– if the deceased had one child, he or she will receive half of the estate;
– if the deceased had two children, they will each receive a third of the estate;
– if the deceased had three children, they will each receive a quarter of the estate.
This French law obligation should be borne in mind by the testator as it could become a major issue for his or her heirs. It is a frequent misconception that the terms of a will which was drawn up in the UK will be effective in France, but this is not always the case.
To put it simply, the transfer of all immovable property based in France will have to respect the réserve héréditaire rule. The transfer of movable property will be governed by the law of the country in which the deceased was last resident.
In the event that one does not want the réserve héréditaire to apply to his or her estate based in France, there are currently a few mechanisms available, although these are not straightforward.
LAW OF THE LAND
These examples above show that, even though the succession regulation will not apply in the UK, it is a powerful mechanism by which to simplify the succession of British nationals who have properties in France. It is the best way to make sure that the deceased’s wishes will be respected in France.
The succession regulation is therefore a great instrument for succession planning as it will be possible to know which rules will govern the succession. It brings some certainty to a matter which is very uncertain.
One of the most important things to remember is to make a choice of law which will be applicable to the succession. As previously mentioned, it is only possible to choose the law of the country of which the testator is a national. Such choice of law could be stated in a will, which was drafted either in the country of residence or in the country of nationality.
The choice of law by the testator will be effective only in countries where the succession regulation applies, and will therefore be effective for the notaire who will deal with the transfer of the French property. It is important to note that it is already possible to make a choice of law, but that it will only be effective from 17 August 2015.
The ability to choose which law applies will not have any effect on the taxes that the heirs will have to pay to the French state for the transfer of the French property. The convention between the UK and France regarding inheritance tax will still apply.
Jean-Baptiste Masson is a notaire with D Poisson S Gaillard Notaires in Paris
Tel: 0033 (0)1 42 65 66 45