Inheritance Law in France

The rules of inheritance in France are affected by the fact that in French law there is no concept of testamentary freedom for all, meaning a person may not merely leave assets to who ever and in whatever proportions they please, if they have children.

Inheritance Rules

Instead, there is the concept of héritiers réservataires, or reserved heirs. As from 1 January 2007, only children are considered reserved heirs (previous to that it included parents). Interestingly the spouse is not considered a reserved heir, except in one particular situation.

Reserved and Unreserved

What a person must leave to their reserved heirs is known as the reserved portion or reserve légale of the estate. Exactly what the reserved portion is depends on the number of children. For example, for someone with three children, 75 percent of the estate must be left to those heirs in equal shares. The remaining 25 percent is considered the quotité disponible (the unreserved portion) and may be left to whomsoever the owner pleases.

Wills

A will is, thus, of limited effectiveness in France, since the wishes expressed will only be upheld as far as French law will allow.

On this basis one might have concern for the surviving spouse who could end up "sharing" ownership of their home. However, it is possible by writing a will to leave the surviving spouse the usufruit, or life interest of the estate. This gives the surviving spouse considerable extra protection, but difficulties remain if the survivor wishes to sell.

Even so, having a French will is normally advisable and a notaire can advise on this.

Marriage Regimes (Régimes Matrimoniaux)

There are various ways of being married in France and these are called marriage regimes.

These control how assets are dealt with between spouses and can be an effective tool in financial planning to deal with succession rules. However, these rarely provide an adequate solution for those with children from a former marriage. Problems with dealing with alterations to marriage regimes are frequent, since for many the change is dealt with under international law and there is much confusion as to how they should be drawn up, especially when dealing with non-French citizens.

It is vital to take advice on each individual situation.

Recent Changes in the Law

After two years of debate a new law updating inheritance law was adopted 23 June 2006, to apply from 1 January 2007. No change has been made to the basic principles to French inheritance law, but certain changes will add flexibility for the future:

• Parents are no longer reserved heirs in the majority of cases
• A parent is able to leave assets directly to grandchildren (as long as the children agree)
• A reserved heir now has the right to renounce formally his right to inherit, during your lifetimes, so that the decision cannot be revoked after your death, (it is understood that this must be done in the presence of two Notaires)
• New "marriage contracts" will no longer have to be ratified by the courts, in any circumstances, which will make the use of this type of arrangement simpler and cheaper
• The law introduces a version of the Germanic idea, the Pacte de Famille or family agreement. This means that a person can get family members to agree to the organisation of their inheritance during their lifetime (not previously possible). By all interested parties signing a Pacte de Famille with the Notaire, a person is able to ensure that the oral promises of their families not to cause trouble after their death, and go against their wishes, can now be set in stone and will be binding
• A person may now leave an asset to a particular person, but with instructions that the asset, or its equivalent value, will be returned to a second person using a legs résiduel. This would be most commonly used in the case of the protection of the surviving spouse, with the children ultimately inheriting, but it can be used in all cases. Although the actual process and the tax treatment will need to be analysed, this is probably the change that will offer the best opportunities for future planning, in case of the second marriage for inheritance
• The delay for accepting or refusing an inheritance has been reduced from 30 years to 5 years

Note: Siddalls are qualified and registered financial advisers in France and are not lawyers. Please remember that the above comments are merely a summary of our understanding of existing and new legislation. This summary cannot hope to cover every detail of inheritance law or the measures proposed. The details of exactly how the new measures will be applied had not been published at the time of writing and are based on our interpretation of the new law and the subsequent press comments. You should always seek legal advice before deciding on any changes to your arrangements.

Further Information

• See AngloINFO INFOrmation Page Will Making in France

Prepared by Robert Kent, South East Regional Manager, John Siddall International
1375 TER Route des quatre Chemins, 83690 Salernes
Tel: 04 92 28 72 80, Fax: 04 92 28 70 00, www.siddalls.fr
Copyright © John Siddall International 2006 All Rights Reserved

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