Guide to French Inheritance Laws and Taxes

  1. Introduction
  2. French Inheritance Laws
  3. French Inheritance Tax
  4. Inheritance Planning in France

4. Inheritance Planning in France

Property Ownership Options

  1. Buy 'En Tontine'
  2. Buy using a Property Company

Juridical Options

  1. Adopt a French Marriage Contract
  2. Enter into a French Civil Partnership
  3. Make a Family Inheritance Pact
  4. Make a Will
  5. Create a Trust Structure
  6. European Succession Law

Financial Planning Options

  1. Buy or Improve with a Mortgage
  2. Make a Gift Between Man and Wife
  3. Make a Gift to Children/Grandchildren
  4. Make a Gift to Others
  5. Take out Life Insurance

8. European Succession Law

Since 2015 a new legal and administrative framework has applied to successions in Europe, with the estate of all decedents now operating under a single European law.

It is enshrined in Regulation (EU) No 650/2012).

The aim of the law is to make the whole process simpler, quicker and easier. It is also to be hoped that it will also make it more secure as only one jurisdiction will apply.

Prior to August 2015, individuals could be subject to inheritance laws in more than one country, leading to substantial delays and confusion in winding up an estate.

Although the original aim of the new regulations was to deal with 'cross-border' successions (where individuals had assets in more than one country), in practice the scope is broader, encompassing all successions. Thus, it also covers those circumstances where the inheritors live outside of the country of the deceased.

In essence, the new regulation provides that the "law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.”

Determining the country where a deceased had their habitual residence is normally a straightforward matter, but where there is any doubt then the usual tests of legal residency will apply, ie, duration and regularity of stay, location of economic assets, family location.

That being the case, a person who is habitually resident in France will have their worldwide estate determined by the inheritance laws applicable in France. This includes real estate located outside of France.

However, the law also provides that "a person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death.”

Accordingly, whether or not an expatriate living in France has assets outside of the country, they can elect via a Will that their inheritance for the whole of their estate be governed by the rules of their native country. This would enable an expatriate in France to escape French forced heirship rules.

This applies even though that person may not be a European national. So, an Australian living in France can elect for the laws of their nationality to apply to their inheritance.

However, non-EU nationals would need to ensure that the laws of their own country would enable them to accept EU law on this matter.

Where you hold more than one nationality you can choose the law of any of the countries of which you are a national.

The choice must apply to the whole of the succession, and not merely any part of it. The whole point of the law is that the estate should be administered under a single national law.

The position of second home owners from the UK (as well as Denmark and Ireland) with property in France has been a matter of some debate in legal circles, as these countries have opted out of the agreement.

Although there is not a complete legal consensus, most legal experts consider that as France has signed the agreement, non-residents with property in France can opt to adopt the inheritance laws of their home country, rather than be bound to accept French heirship laws. Nevertheless, due to the risk that this might not be accepted by a UK jurisdiction, some additional steps seem desirable.

In addition, if a UK national resident in France died intestate, as the UK has not signed the agreement UK law would apply to real estate in the UK, although French it would be included in the calculation for liability to inheritance tax in France.

The regulations are also unclear on how notaires should treat succession planning arrangements reached in another Member State that may conflict with the laws of the country where the succession will be handled.

Accordingly, you need to be careful about the potential conflict between different inherent planning options, particularly if they have not all been undertaken in the same country.

Taxation

The new legal framework leaves untouched the fiscal arrangements, which remain the prerogative of the country where the person is habitually resident.

So although the new legal framework offers testamentary freedom, it comes at a price, for if you wish to leave assets outside of your immediate family your inheritors could face a substantial inheritance tax bill.

There are also limits in France on just how much you can leave a family member before they become liable to inheritance tax.

Process

The choice of law can be made in a Will or in a separate declaration.

We would strongly recommend that you draw up the Will through the auspices of a French notaire in collaboration with a solicitor from your home country.

Although you may adopt the succession law of the country of your nationality, if you are French resident the succession process will still be handled in France by a French notaire, but in accordance with the inheritance rules of your home country. In practice, it is likely you will need to appoint both a notaire and a solicitor in your national country if you have adopted their laws.

European Certificate of Succession' (ECS).

To give effect to the new provisions the regulations introduce a supranational 'European Certificate of Succession' (ECS).

This certificate is designed to enable heirs, legatees, executors or administrators to prove their legal status and/or rights in any country.

In France the role of administration is granted to the notaires, who are the only persons authorised to issue one.

The notaires are also responsible for processing the estate of those with assets in France with a certificate issued by a relevant authority outside of France.

The government have even stipulated the fee payable, which will be the sum of €117.

Where there is a dispute about the content of the certificate the decree gives power to the French courts to adjudicate on the matter.

The certificate does not replace the need for a Will or other inheritance planning steps to be taken; it merely serves as proof of the distribution of the estate and how it will be administered.

The document can also be used for those estates which are intestate, and where therefore the habitual residence rule will be applied.

If you wish to make use of the right to opt out of being obliged to adopt French inheritance laws you need to make a Will.

Once issued, the ECS is recognised by all Member States without the need for further formality, although it will still be necessary to undertake the normal conveyance of real estate to the heirs.

However, the certificate is not mandatory, so if you consider you have adequate other means to prove your inheritance or rights of administration then you can dispense with the form.

In addition, the certificate has no validity in non-Member states outside of the EU, who may choose to ignore it.

In the case of the UK, a grant of probate will still be necessary for UK assets.








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