New French Law, Old Problem

Unfortunately, just as we had got used to the idea that a British national can choose the law of their nationality to apply to their French property (rather than French law passing it largely to children), France has introduced a new ill thought out law which, as of 1st November 2021, allows France to attempt to enforce the French reserved inheritance rights even where a non French National has legitimately elected the law of their nationality under the EU Succession Regulation.

This applies where the testator lives in France (at their death) or was an EU Citizen or where a beneficiary is an EU Citizen.

It will not affect most second home owners who are generally UK residents with second homes in France who have children, (unless any children are EU resident).

It will not affect families who are not disinheriting bloodline children, you can still leave all to spouse and then to children, if all of the children are from the same two parents.

 However, it may affect families who are wanting to disinherit bloodline children they might have fallen out with.

 The general consensus is that the ruling will not stand up to a challenge in the European Court, and the EU Commission is currently already investigating this as it appears to contravene EU law.

 However, I am currently advising families who might be affected to consider the inheritance planning methods that applied prior to the EU Succession Regulation, such as Tontine clauses, Communauté Universelle Marriage Regimes, change of ownership structure, possibly even SCI (French property holding company ownership), and other techniques that used to be widely used prior to the EU Succession Regulation coming into effect in 2015.   We can then review matters when someone has had a test case and hopefully corrected this.

It is a new French law, causing an old French law problem, but with established ways to address it, until it is hopefully revoked.

John Kitching

Director

French Law Consultancy Limited