Proposed “Republican Principles” law in France poses risks for British nationals planning their estate

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On Friday 2 July, the Assemblée Nationale (French MPs) approved a draft law which, if passed, is likely to have a severe impact on British nationals currently planning their estate, as well as on the estates of British nationals being administered in France in the future.

Whilst the proposed law includes various provisions touching on all aspects of French “Republican Principles”, article 13 relates directly to cross border estate planning and estate administration.

It would add a new paragraph to article 913 of the French civil code, stating that where 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 a EU country, then the children can ask to receive compensation drawn from the French assets for their forced heirship rights.

Article 13 of the new law comes under the heading “Dispositions in relation to the equality between men and women” which suggests that its main objective is to protect women losing out on their inheritance rights where the applicable law to an estate is Shariah law. However, it’s worded widely enough that British nationals wishing to avoid French forced heirship in their estate planning would also be affected by it.

Currently, under the European Succession Regulation (ESR) which France is bound to apply, a person can opt in a Will for the law of their nationality to apply to their worldwide estate, including their French assets. For many British nationals, who customarily prefer to leave their worldwide assets to their surviving spouse with children potentially inheriting on second death, this was a godsend. It allowed them to proceed with full testamentary freedom and bypass the rigid French forced heirship system, especially where forced heirship would result in a surviving spouse and their stepchildren jointly owning their home, which is never an easy situation even if the family gets along. The ESR became especially useful for British nationals living in France as without such a choice of national law in their Wills, French law and forced heirship would likely apply to their worldwide estate, including assets located outside of France.

If the new law is passed, considerations will need to be made if the testator or one of their children resides (or plans to) in France or another EU country. In its current drafting, it doesn’t matter if the children wishing to claim their forced heirship rights do not live in France or a EU country, as long as their parent or one of their siblings does. Whilst the proposed scope of the new law is limited to the French assets, meaning that assets located outside of France could not be obtained by the child or children making a claim, there could still be severe consequences if, in order to pay the compensation, the surviving spouse loses their savings located in France or a share of their French home. “Choice of English law” English Wills will simply lose their efficiency as a means to protect the interest of the surviving spouse above and beyond what French law provides, or as a way to disinherit a child.

Should the proposed law be enacted, it will apply within three months of being officially published. This means that the law will apply to all estate where the deceased died after its entry into force, which could happen before the end of the year. Potentially, this could undo years of careful estate planning under the ESR and is likely to create significant delays as Notaires will need to consider how to proceed in estates where the requirements for a child to make a claim under the new article 913 of the Civil code are met.

Likewise, uncertainty remains over how this will work in practice, especially in the case of estranged children. Will the Notaire need to find all estranged children and notify them of their right to claim for a forced heirship compensation and wait for their reply? Will the deceased’s family need to prove that the deceased did not have any other children than those already identified and who may be happy for the estate to proceed without making a claim under the new article 913? If so, then they may be forced to engage a French genealogist at extra costs. Will this new right to claim ever become time barred in the same way the “action en reduction” (the standard claim under French law when a Will breaches forced heirship) does?

It’s likely to take years until a Notarial best practice develops around the practicality of the new right under article 913, potentially leaving families, and particularly surviving spouses, in legal limbo while the Notaire figures out how they should proceed to avoid professional negligence.

As can be expected, the proposed law is encountering strong protest from cross border practitioners. The main objection is that it’s entirely contrary to the spirit of the ESR, which allows a person to opt for the law of their nationality, even if said law does not know forced heirship. Some argue that France should not be enabling its own national law to limit the application of the Regulation by bringing its forced heirship back in play. Many are pinning their hopes on the new law being quashed, either by the Constitutional Council before it is officially published or further down the line by the European Court of Justice, for being in breach of EU law. However, if it comes to latter scenario, it is likely to take many years before a case reaches this stage and many families will be put in stressful situations.

If the new law is not overturned, what could be done at the stage of estate planning to counter it? In practice, few options will be available. If a couple is already established in France and own their home “en indivision”, short of moving back to the UK (which would still not be failproof as they could not prevent their children from living within the EU which would then open the right to a claim under article 913) there will be no options, other than potentially opting into a French matrimonial regime in very limited cases. If a move to France with a property purchase is planned, then the infamous tontine is likely to make a comeback as being a more efficient way to secure the rights of the surviving spouse over this asset, but the French moveable assets (bank accounts, savings etc.) would still be at risk unless moved to the UK.

In conclusion, many difficult months lie ahead for cross border practitioners and their clients if this new law does come to pass.