The French Civil Code has two important legal concepts known as the “réserve” and “quotité disponible”.
Roughly speaking, the “réserve” (essentially for the children) is a part of the deceased’s estate which he/she is not entitled to freely dispose of and the “quotité disponible” is the part of the estate which he/she is free to dispose of.
It is however possible to find an appropriate way that would more or less freely match a testator’s wishes and our real property team would be please to assist you with this.
Will and European regulations
European Regulation number 650/212 aimed at “simplifying inheritance matters which have an extraneous element” (for example owning real property situated outside the country of nationality and/or residence of the testator) was adopted on 4 July 2012 and came into force in France on 16 August 2012 with the date for its formal entry into application set at 17 August 2015.The principle is that the testator may choose (as the applicable law to his or her testamentary estate) the law of State of which he or she is a national.
The choice of the applicable law must however be made in an explicit manner in a declaration which takes the form of a testamentary or similar deed (e.g. a Will).
The formal validity of the deed in question is though governed by the law of the member state chosen by the testator.
The new European regulation relates solely to civil law issues and for inheritance tax purposes, French tax would still be fully applicable.
Matrimonial property settlement agreement
It is also possible, for married couples, to envisage changing the marital property settlement (in French “régime matrimonial”) but only insofar as the French property is concerned and to adopt, for example, the “communauté universelle avec clause d’attribution de la totalité de la communauté au conjoint survivant”.Under this marital property regime, in the event of the death of the first spouse, the whole of the property would automatically become the sole property of the surviving spouse and, under the current provisions, without any French inheritance tax ramifications whatsoever.
It is possible to purchase the French property under a “tontine” regime.Under this French legal concept:
- on the one hand, the purchasers have joint use, throughout their life, of the property,
- on the other hand, under the « clause aléatoire » the first of them to die will be considered as never having had a right to the ownership of this property, which will belong entirely to the
survivor in whom the said property will be deemed to have always vested since the date of the present purchase
For further information on inheritance planning query please click here.