French forced heirship rules, Regulation (EU) n° 650/2012 and the new prélèvement compensatoire

The drafting of wills with a French element.

The general consensus after the coming into force of the succession Regulation (EU) n°650/2012 was that UK habitually resident individuals could effectively circumvent the French forced heirship rules over French immovables by a will applying English law. That meant that certain issue could be excluded from benefit under a will or succession where they could not have been prior to the Regulation coming into force. Where the British (i.e. English) testator resident in France chose to use English law as the law of his British Nationality to govern his succession, that was also considered possible. However, that was to reckon without the underlying depth and robustness of the French constitution which requires issue to be treated equally and to take equal shares of what is not part of the quotité disponible or free portion with which our Scottish colleagues will be more familiar.
As indicated previously, the French Parliament have now passed the law which now enables not only French resident children to challenge such arrangements, but also children resident in other EU jurisdictions to claim French forced heirship rights over property situated in France irrespective of the law applicable under the Regulation to reacquire or top up their inheritance to a French level.

The Notaire responsible for the French succession has to call each potential heir in and inform them of their rights under the prélèvement compensatoire.

Whilst certain provisions of the law were subject to a review by the Conseil constitutionnel, that body was not called on to rule on the proposed amendment to article 913 introducing this prélèvement compensatoire.

Those who drafted wills intending to oust French forced heirship rules should review these promptly with their clients.

However, it does not end there. Where any client has French situs assets, and has sought to apply, for example Shariah law to their succession, whether by nationality or simply on the basis of habitual residence in a Shari’ah jurisdiction , thus restricting a daughter’s entitlement to one half of that of their their male siblings, a daughter resident elsewhere within the EU or any other sibling can go to France and plead the new prélèvement to have her share increased out of the French assets in accordance with French principles. Indeed the notaire responsible for the succession to the deceased’s assets in France has to call al the heirs in and inform them of their rights in this area.

The same possibility is open to disgruntled issue of British parents who have been effectively disinherited by reference to French standards, provided that they are resident within the EU or if the deceased was resident in the EU (not just France).

My literalist translation of the amendment is as follows:

I. – Article 913 is completed by a paragraph drafted as follows: « when the deceased or at least one of their children is, at the moment of their death, a national of a Member State of the European Union or resides there habitually, and when the foreign law applicable to the succession provides no reserve mechanism protecting children, each child or heir or their successors can deduct a compensatory prélèvement on existing assets, situated in France on the day of the death, so as to be re-established in their reserved rights granted by French law, within their limits.»

Whilst spouses are now considered to qualify now as reserved heirs in another category, they do not appear to benefit from the prélèvement.

As you can see, it is widely drafted and it only takes one child to be a national of or habitually resident within the EU for the amended article 913 to apply to their benefit and apparently of all.

It does not only apply to immovables, but also to movables such as shares and bonds.

Note that, post Brexit, British children cannot benefit from this prélèvement unless they have a dual EU nationality, live in Europe or finally or possibly if one of their siblings is an EU national or EU resident and prepared ti stand up for their rights - I might say droit dans leurs bottes. That is assuming that the French drafting is considered wide enough to impose a high level constitutional concept of equality as between EU and non-EU heirs.

A more detailed commentary can be found here.

Please do not hesitate to contact me for further information or assistance.

Peter Harris

On of the main theoretical objections to the French prélèvement compensatoire was that the Regulation overrode the application of French law where there was either a choice of English law in the disposition under article 22, or applying the English law as the law of habitual residence of the deceased under article 21.

However, the CJEU has confirmed in a recent preliminary ruling C‑277/20 from an Austrian Court (French version available) that the Succession Regulation does not apply to liberalities made otherwise than by succession. In other words it does not apply to lifetime gifts. But that is not the end of the story as the Considerant (14) to which the Court referred has a further sentence which was not relevant to the Court’s ruling and which was not cited in full. In fact lifetime gift clawback mechanisms of the prélèvement genus are to be governed by the law governing the succession, not the law of the place (France) where the assets argued to be subject to the clawback attempt are situated.

I have set the consequences of this out here.

Lifetime gifts of rights in rem such as the nue-propriété of immovables with retention of a usufruit are frequent under French law on the recommendation of a notaire in wealth and succession planning. The question is, how far can a disgruntled heir go in asserting the new prélèvement against French property in the context of an international succession where they have not received the equivalent of the French reserved rights over the whole international succession? In legal terms Can France outstare the Regulation and the second sentence of Considerant 14?.