Update on French inheritance law

French reserved heirship is a mechanism that has been enshrined in French inheritance law since Napoleonic times and is intended to protect close family members, and in particular children on their parent’s death.

From an English common law perspective, reserved heirship is alien and comes in contrast to the inheritance law of England & Wales where there is testamentary freedom (bar a potential claim under the Inheritance (Provision for Family and Dependants) Act 1975 that can occasionally apply in limited circumstances).

Since the EU Succession Regulation came into force, British nationals who are most closely connected to England or Wales have nonetheless been able to elect within their Wills for the law of England and Wales (“English / Welsh law”) to apply to the devolution of their French assets. Making a Will with an election of English law to govern the whole of the deceased’s succession, including the succession of the French assets became a useful estate planning measure for British/English nationals who own a property or live in France wishing to avoid the French forced heirship rules.

However, France has recently adopted a new law aimed at reinforcing the Republican Principles, which casts doubts on the effectiveness of electing English law within a Will as a way to bypass the French reserved heirship rules.

The new law introduces a compensatory mechanism in situations where:

• the deceased made lifetime gifts or left bequests or legacies within his/her Will to beneficiaries (other than the reserved heirs) exceeding the deceased’s disposable estate (la quotité disponible), and,
• the law applicable to the succession is a foreign law which does not recognise the children’s reserved heirship (such as the Law of England & Wales).

The scope is wide as the new provision has vocation to apply to any succession where the deceased or at least one of the deceased’s children is an EU national or is/was habitually resident in an EU country (such as France). British nationals who applied for a dual EU nationality following Brexit would also fall within that definition.

Under the new law, only British/English nationals living in the UK and whose children all live in the UK (and have no EU nationality) would continue to be able to make Wills with an election of English law without any additional scrutiny.

The rule will come into force on 1 November 2021 and apply to any succession, which opens in France (i.e. a succession in relation to a French property or in relation to a French resident) from that date although any gifts and dispositions made by the deceased prior to that date are taken into account.

The right of compensation is available to all of the deceased’s children (or the grandchildren if the child predeceased their parent) – but not the spouse or stepchildren – and there is no requirement to prove any financial need.

The Notaire dealing with the French succession has a reinforced duty to inform each child of their right to make a claim before the succession formalities can be completed.

The compensation can only be claimed against the assets of the deceased that are situated in France, such as a property, but including movable assets such as a French bank account.

It is believed that it is only a matter of time until the European Court of Justice is asked to comment on the compatibility of the new French law with the EU Succession Regulation and its underlying principle of unity of succession.

If a case is brought, it may be that the ECJ would declare the law as being incompatible with European Union legislation. However, until then, British nationals living in France or owning assets in France who are concerned by this new compensatory mechanism ought to review their existing Wills and seek further advice from a French law specialist.