Cross-border estates – time for a will review?

Sarah Bogard

Senior Solicitor & Chartered Tax Adviser

View bio

January 23, 2020

Categories French Property Law UpdatesPrivate Client Law Updates

We have a lot of experience in helping beneficiaries with the administration of estates in France, and in particular, since 2015 the EU Succession Regulation must be considered. Many Wills might now be in need of significant update.

August 2020 will mark the 5th anniversary of the EU Succession Regulation 650/2012, also known as Brussels IV. This is relevant in the context of Wills, and working out how a cross-border estate will be distributed.

The Succession Regulation

Prior to the Regulation, both France and England applied succession laws as follows:

  • Immovable assets – land and property – were governed by the succession laws of the country where they were situated;
  • Movable assets (eg bank accounts and personal items) were governed by the succession laws of the country of the deceased person’s domicile at the date of death.

This is why French succession law was applied to a French property, and why careful consideration had to be given to the property ownership structure from the point of purchase. Couples would buy a property in the form of tontine (similar to joint tenants in respect of land in England), or make a change of matrimonial property regime under French law, or perhaps set up a French property holding company – Société Civile Immobilière . All these options were often taken with objective of avoiding the forced heirship rules in favour of children – to delay children’s inheritance until the surviving parent’s death.

Where are we now?

The aim of the Regulation was to allow for the application of one country’s succession laws to the whole of an estate which contains assets in more than one EU Member State.

Now, the general rule under the Regulation is to allow for the succession laws of the country of a person’s last habitual residence to apply to the whole estate. There is also the option to make an express declaration in a Will to have the succession laws of your country of your nationality to apply. So, for a British national whose closest links are with England or Wales, this would mean full testamentary freedom, even over the French property in the estate, and so the ability to delay the children’s inheritance over the French property until the surviving parent’s death.

Is a Will review needed?

If you own assets in France but you haven’t updated your Will recently, a review is certainly recommended. Take advice on how the Regulation can apply to your case, and get your Will updated accordingly.

If you don’t have a Will at all, French succession law is likely to apply to your French property, whereas correct provisions in a Will might better achieve your objective as to who you want to inherit your property.

It won’t always be advisable for a British national to make a declaration of English succession law to apply to the French estate because it might lead to a higher French inheritance tax bill for the beneficiaries, especially where there are stepchildren within the family.

If you own assets in another EU Member State, a review of your Will in light of the Succession Regulation would also be recommended.

For further information please contact Sarah Bogard on 01227 763939.