In this article, Nadine Walton comments on recent changes to French succession rules and the potential implications for UK individuals holding assets in Europe. The consequences for English-domiciled clients are particularly closely examined.
In November 2021, France introduced a new rule relating to succession which seems to contravene a key EU regulation issued on the very matter. This regulation is the European Succession Regulation 650/2012, more commonly referred to as 'Brussels IV' or the 'EU Succession Regulation'.
Brussels IV and the quest for harmonisation
Brussels IV came into force in August 2015. Its purpose was to introduce rules to ensure that the estate of any deceased individual should be dealt with according to the law of only one (EU) jurisdiction, regardless of where assets of the estate may be located across EU countries.
Under Brussels IV, individuals can choose that the law of their nationality should apply to determine succession to their entire estate. Otherwise, the law of the jurisdiction in which they are 'habitually resident' will be deemed to apply to their succession automatically.
To give an example, an English national living in Spain, exclusively holding 'Spanish' assets, would nevertheless be able to prescribe via their will that the law of England & Wales should apply to succession of their entire estate.
The implications in practice
The effect of Brussels IV is important, and can perhaps seem particularly notable when examined through the lens of an 'English' qualified lawyer.
This is in view of the fact that England & Wales remains one of the only jurisdictions in Europe which does not impose 'forced heirship' rules. Instead, the principle of testamentary freedom reigns supreme. Spouses and children of a deceased individual have no automatic right to a portion of the estate.
Despite the fact that the UK has now left the EU, the impact of the EU Succession regulation here remains unchanged.
In basic terms, where a valid choice of 'English' (or, indeed, Scottish) law has been made by an individual, the courts here are prevented from deferring to the succession rules in any foreign EU jurisdiction. This is the case regardless of whether property in the estate is located in France, Spain, or any other country which tends to benefit from sunnier climes and better wine.
The law validly 'chosen' by the individual must be applied.
So, if you're an English national and you don't want your children to inherit your Tuscan villa before your partner has seen out their days there, you're in luck *. (*Subject to us drafting the appropriate provisions in your will, and advising you on the potential claims they could make. Don't DIY this please; that Tuscan villa is too precious to warrant the risk.)
Enter France: Prompting an escape from the chateau?
Le chat, and les pigeons are two words I just about recall from A-Level French. And the former, it seems, is very much amongst the latter.
In November 2021, France implemented new rules domestically which dictate that:-
(i) where a deceased individual or any of his children are nationals of or resident in an EU member state; and
(ii) the (non-French) law applying to succession of the estate does not protect a specific portion of the estate for the deceased's children
then the children may be compensated from any property held in France.
Not only that, but France has actually imposed an obligation on notaries with a view to giving the new rule some teeth. When a notary now becomes aware that heirs are not protected by the proposed distribution of the estate, French law dictates that they must actively inform those heirs of their rights to a reserved portion.
So, on this basis, an English national enjoying their retirement in their gite in Bordeaux would still be able to prepare an English will, making a choice of English law, disinheriting their children. Yet French rules would undermine the content of that will, and the application of English law (with its emphasis on testamentary freedom), in the process.
This seems squarely to contradict Brussels IV.
But why, and what now?
The general view seems to be that the new rules were introduced in France specifically to prevent perceived 'unfairness' in the case of wills complying with Shariah law principles. Via these testamentary documents, male heirs generally benefit to a greater degree than their female counterparts.
The French rule does, however, have potentially much wider effects, as exemplified above. It threatens to affect any succession in which the deceased or their offspring have a connection with an EU member state.
According to reports, the EU Commission has instigated an investigation into the new rule's compatibility with the EU Succession Regulation. The conclusion of this scrutiny, and how swiftly it will be reached, remains to be seen. In reality, it may be that it is not until a pertinent case challenging a distribution under the rule makes it all the way to the European Court of Justice that we're better placed to understand the weight that will be given to the French rule.
In the meantime, it remains important to ensure that your estate planning is robustly managed. Take the opportunity to ensure you have made a valid 'choice of law' in your will, which remains the strongest possible statement you can make to determine your succession regime. And don't look at your will in splendid isolation. Consider your own residence, family connections to other jurisdictions, and any lifetime planning you may wish to undertake in the future, alongside the taxation implications of all of the above. We commonly work on multi-jurisdictional matters and accordingly have an understanding of the tools used (in France as well as other EU jurisdictions) to mitigate the effects of inflexible forced heirship provisions for the English domiciliary.
If you have any questions, please do not hesitate to get in touch.
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