Saturday, 1 August 2015

Saturday, 1 August 2015

Wills – a new opportunity for French owners & buyers

Since I started selling houses in 2002, one of the biggest challenges as an agent has been advising buyers about the Napoleonic Code legislation, and how it could impact upon the ownership of a property in France.

Do nothing, and the Notaire will draft the Deed, and therefore the succession plans the traditional French way. The problem is that the French do not traditionally pass the house to a survivor upon the 1st death for a couple. They see this as disinheriting their children. There has always been a way around this, either using a ‘tontine clause’, or by a marriage contract called ‘communauté universelle’, that generally insured a jointly owned property would pass to the survivor.

From 17th August, it is going to be possible under new European regulations to allow EU citizens to choose whether the law applicable to their succession should be that of their habitual residence or that of their nationality. This is a major opportunity for people to get their “house in order”, (sorry for the pun), and decide how they wish to leave their property estate. It is important to get professional guidance and we expect Notaires to be busy assisting clients old and new with their arrangements. Please note this only impacts upon the succession, and does not change the laws relating to taxation.

Previously, in the absence of any other arrangements, the property would have been divided as follows :

Inheritors The « Réserve » Freely Disposable
Spouse 1/4 of estate 3/4 of estate *
One Child 1/2 of estate 1/2 of estate
Two Children 2/3 of estate 1/3 of estate
Three Children 3/4 of estate 1/4 of estate

* Only freely disposable if there are no children, as they are ‘protected heirs’.

In July 2012 the European Parliament and the Council of the European Union adopted regulation 650/2012, ‘Jurisdiction, applicable law, recognition and enforcement of decisions, and acceptance, and enforcement of authentic instruments in matters of succession’. Commonly known as Brussels IV, it was devised to provide increased flexibility in deciding which law would apply in governing succession. The Regulation is binding on all E U member states - except for the UK, Ireland and Denmark who have opted out. This could impact upon French nationals living in the UK, but not UK nationals living in France, so British expatriates in France can choose UK law if they wish. UK residents with property in France, the applicable law will be that of their habitual residence – the UK.
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