On 1 November 2021, a second paragraph was added to Article 913 of the French Civil code which, in essence, reintroduced forced heirship in estates dealt under a foreign law that does not have a forced heirship equivalent, by creating a “right of compensation” (in French “droit de prélèvement compensatoire” “DPC”) for reserved heirs disinherited under the foreign law.
This is likely to have a severe impact on British nationals when planning their estate, as well as on the estates of British nationals being administered in France in the future. In light of this, we have covered the pressing questions that the introduction of the DPC raises here.
Prior to the introduction of the DPC, we produced a blog on its likely implications which can be found here.
No, the date on which your Will was made will not be taken into consideration to determine whether the new law applies. If your death occurs after 1 November and the other criteria are met, the Notaire will have to apply the new law. However, the date of your Will still matter as far as determining which law applies to your estate.
No. A formally valid English Will continues to produce effects in France under the Hague Convention on the international validity of Wills, even if its contents are in breach of French forced heirship. However, in practice, its effect will be limited by either forced heirship or the DPC.
In principle, under French law you are not allowed to agree with your beneficiaries, in advance of your death, how your estate will be distributed on your death. One of the few exceptions is a very solemn Deed called a “Renonciation Anticipée à l’Action en Réduction” (“RAAR”) under which a child, in full knowledge of their forced heirship rights, agrees during the lifetime of their parent not to make a forced heirship claim, should their parent have left assets to other beneficiaries above and beyond the available share of the estate (i.e. in breach of forced heirship).
However, because the RAAR is a very limited exception, it cannot be used or interpreted as also working for the DPC, and therefore at this stage there is no possibility under French law for a child to agree during the lifetime of their parent that they will not make a DPC claim.
Until there is a Court decision to the contrary and the law is formally repealed, it is enforceable. It is likely that at some point a Court will need to rule on its validity, but it will take several years and probably a very large estate before a family goes all the way to a Court which has the authority to rule on the validity of that law. If the law has been repealed by the time you die, then it will not be applied to your estate.
In principle, yes. Under French law, if a property is owned “en indivision” (which it will be if a child inherits a share of it further to making a claim under French law) then any owner is entitled to apply to the Court to force a sale of the property. In practice, a French judge will consider the practical circumstances of the case and can on balance decide that the harm/loss caused to the surviving spouse living in the French property by a forced sale is too significant and so refuse to make an order for sale. Occupying the French property in itself would not be sufficient to cause a judge to refuse to order a sale, there would need to be additional circumstances (for example, the fact that an owner was physically running a business from the property, or the fact that the surviving spouse was elderly, were both considered circumstances warranting a delay in issuing an order for sale).
In terms of forcing the sale of other assets, if the surviving spouse does not want to share assets with the claiming child, funds will have to be found to pay them what they are entitled to receive under the DPC.
Yes, a tontine clause remains an effective way to ensure that your surviving spouse (or partner, whoever the surviving owner is) receives the full ownership of your French property on your death. This is because when a property is purchased “en tontine”, on the death of the first owner it will be deemed that the property was always solely owned by the surviving owner, from the date of purchase (except for inheritance tax purposes). The deceased’s share in the property will therefore not be considered to form part of the estate on which the DPC will be calculated, though see below in terms of how to pay out the sum due under the DPC when there are no cash assets available.
Bear in mind that a tontine can be contested, but this would involve Court proceedings and a very specific set of circumstances to be successful.
No. SCIs used to be popular to ensure that the surviving spouse could inherit the French property before the entry into force of the European Succession Regulation because SCI shares are moveable assets which, if you are domiciled/habitually resident in England, are governed by English law. However, the DPC has been set up especially for scenarios where a law other than French law applies. SCI shares will be considered as French assets for the purpose of the new law and therefore taken into account when calculating the value of the claim.
No, in that they will not be taken into account in principle to calculate the amount the claiming child is entitled to receive, as the scope of the DPC does appear to limit the right of claim to the French assets only. However, if there are insufficient cash assets to satisfy the claim in France or the surviving spouse is not willing to share the ownership of the French property with the claiming child, then they might need to dispose of assets located in the UK to pay the child their due.
The DPC is statutory in that you cannot prevent your children from making a claim. However, they will not be forced to do so under French law and they will not automatically inherit a share of your estate. Therefore, when informed of their right to make a claim under the DPC your children can absolutely say that they are not interested and that they are happy for your chosen beneficiaries as set out in your Will to inherit. This will be recorded as part of the French estate administration process to ensure that they cannot then change their mind in the future.
It depends on the composition of your estate. In practice, the Notaire will attribute a value to all assets within the scope of the DPC (i.e. assets located in France except properties passing under a tontine) and then calculate how much the claiming child is entitled to receive as a monetary value. It will then be up to the surviving spouse to decide how to fulfil the amount, i.e. either giving cash or specific assets, or selling assets if not enough cash is available. In practice if the only asset in the estate is the French property, then the claiming child would be entitled to a share of it, unless it is sold to pay them off.
There is a double criteria for the application of the DPC:
- You (the deceased) or at least one of your children is habitually resident in a country of the EU (any country of the EU, not just France) or is a national of an EU country; and
- The law applicable to your estate does not have an equivalent to forced heirship
For British nationals, it is commonly agreed that the possibility for children to make a claim on an estate under English law is not equivalent to forced heirship (there is some uncertainty as to whether “legal rights” under Scottish law would qualify as a forced heirship equivalent). Therefore, in estates where the applicable law is that of England & Wales, only the first criterion needs to be fulfilled for the new law to apply, and the death must occur after the entry into force of the new law, i.e. 1 November 2021.
Previously, when English law applied to French assets, Notaires were less concerned with proving how many children a deceased had, as forced heirship did not apply under English law. With the introduction of the DPC, however, this is likely to become more complicated as Notaires now have a legal duty to check whether, on the date of death, the deceased has a child habitually resident in the EU, or who is a national of an EU country, (which will trigger the application of the DPC, even if the deceased was not himself habitually resident in the EU, or a national of an EU country) and, secondly, to check when all the application criteria are met so that all children can be informed that they are entitled to make a claim under the DPC.
In the absence of formal documents recording the number of children a person had during their lifetime, it is likely that it will be deemed best practice across Notaires’ offices to instruct a genealogist in all estates where the application criteria are met (the costs of which – around €1,000 for straightforward estates – will have to be paid by the known beneficiaries).
