Succession

In this edition, Andrea Glover, International Financial Adviser at The Spectrum IFA Group, writes about the changes coming into force in the French law on succession, which is effective from November 2021.

This new directive requires important consideration by British nationals who live or own a property in France, as they may need to seek appropriate legal guidance on how this new ruling impacts them, dependent on family circumstances and wishes upon death.

The French Senate recently passed legislation to tighten the civil code around inheritance law in France. This law will effectively erode the EU Succession Regulation (ESR) of 2015, whereby British nationals had been given the option to avoid French succession in their Will by applying the succession law of the country of their nationality. Effectively, this meant they could dispose of their estate as they wished. For many British nationals, this allowed them to fully protect a survivor on first death and then leave their assets to their children on second death. It also allowed for estranged children to be disinherited.

The main purpose of the change in law is to allow children of the deceased to challenge a Will that adopts the ESR of 2015 if they believe they have been disinherited or unfairly treated. The rule applies if the law applicable to an estate is a foreign law without a system of forced heirship and where either the deceased or one of their children lives in an EU country. The children could be awarded compensation by withdrawing from the estate their share of reserved rights under French succession law. The new law is limited to French assets, meaning that assets located outside of France could not be obtained by the child or children making a claim, but obviously this could have a detrimental effect on French property ownership and French savings accounts for the surviving party. The Notaire is now legally obliged to inform children of their rights under this new law, although it is not yet known how this will work in practice, particularly with estranged children. This change has been widely criticised by cross border practitioners as it goes against the principles of the ESR of 2015 and it is highly likely that this will be challenged in the EU courts, but obviously this could take years to come to fruition.

In the meantime, my advice is to speak to a Notaire or cross border lawyer to see how this impacts you, particularly if you have already made a Will under ESR of 2015. It is also worth mentioning that, where applicable, there are other legal mechanisms available for establishing property ownership to protect the survivor, such as the ‘en tontine’ clause. Considering this new legislation, international assurance vie contracts could now play a more significant part in inheritance planning, as the assets are not held in France but with companies that are typically situated in highly regulated EU financial centres, such as Dublin and Luxembourg. It is an excellent vehicle to ensure that your moveable wealth is passed on to your chosen beneficiaries, outside of this new ruling.

www.spectrum-ifa.com/ financial-advisor-france/ andrea-glover

The article above is provided for information purposes only. It does not constitute advice or a recommendation from The Spectrum IFA Group.