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65 The new French prélèvement successoral intended to uphold Republican Principles. What this means for supposed "Testamentary Freedom" over your assets in France.

September 1st 2021

Firstly, what is or rather was the prélèvement successoral? It is not to be confused with the fiscal prélèvements currently being introduced for French residents and non-residents alike.

The French constitution is based on certain fundamental principles. One of these was the equality of children in relation to succeeding to the property of their parents on their demise. The droit d'ainesse was one of the fundamental reasons for the French Revolution as immovable property went principally to the eldest potentially leaving little for the remaining cadets.

The amendments to the Code civil introducing the prélèvement compensatoire take effect by additional paragraphs to articles 913 and 921:

Article 913 after 1st November, 2021

…….

Lorsque le défunt ou au moins l'un de ses enfants est, au moment du décès, ressortissant d'un Etat membre de l'Union européenne ou y réside habituellement et lorsque la loi étrangère applicable à la succession ne permet aucun mécanisme réservataire protecteur des enfants, chaque enfant ou ses héritiers ou ses ayants cause peuvent effectuer un prélèvement compensatoire sur les biens existants situés en France au jour du décès, de façon à être rétablis dans les droits réservataires que leur octroie la loi française, dans la limite de ceux-ci.

Article 913 English lay literal translation

…..

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 their children, each child or heir or their successors can claim and 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.»

And

Article 921 after 1st November, 2021

…….

Lorsque le notaire constate, lors du règlement de la succession, que les droits réservataires d'un héritier sont susceptibles d'être atteints par les libéralités effectuées par le défunt, il informe chaque héritier concerné et connu, individuellement et, le cas échéant, avant tout partage, de son droit de demander la réduction des libéralités qui excèdent la quotité disponible.

Article 921 English lay literal translation

…..

« when the Notary takes note, during the administration of the succession that the reserved rights of an heir are potentially affected by liberalities made by the deceased, they inform each heir concerned and known, individually and, where appropriate, before any allocation and distribution, of their right to require the reduction of such of the liberalities which exceed the free portion. »

" Liberalities" includes prior lifetime gifts and legacies

 

The recent history.

Until it was declared anti-constitutional by the French Cour Constitutionnel in August 2011, no 2011-159 QPC, (Mme Elke B.) a French national could claim their forced or reserved heirship rights over French assets situated within the French jurisdiction, to the extent that they were being excluded from these rights under a foreign law governing the succession of a French de cujus abroad. Note that the EU Regulation on Successions (n° 650/2012) enabled successions in France of deceased individuals either habitually resident outside France, or having foreign nationality to apply direct provisions to their French property than the equality as between issue and the free portion or quotité disponible. Note that this privilege was not limited to French nationals, but could be invoked by foreign heirs who had been disadvantaged in comparison to their French rights.

The prélèvement has been in force since the introduction of Article 2 of the loi du 14 juillet 1819 relative à l'abolition du droit d'aubaine et de détraction : « Dans le cas de partage d'une même succession entre des cohéritiers étrangers et français, ceux-ci prélèveront sur les biens situés en France une portion égale à la valeur des biens situés en pays étranger dont ils seraient exclus, à quelque titre que ce soit, en vertu des lois et coutumes locales ».

The French Republic contains some fundamental measures of a constitutional value which go beyond the mere principles Liberté, Egalité et Fraternité and implements those. The issue here is that the French Government has now passed a n amendment to the Code Civil is attempting to reintroduce the prélèvement within a general reassertion of Republican principles in curtailing the increasing Communautariste tendency to factionalisation to undermine these.

Whilst I applaud the political approach in general, the implications of the attempt to render French succession law independent of the EU Succession Regulation is flawed as there is little room for public policy derogations in that Regulation.

The prélèvement laid down in article 2 of the 1819 Law was declared unconstitutional as it infringed the principle of equality as between heirs. See Conseil Constitutionnel Décision n° 2011-159 QPC https://www.conseil-constitutionnel.fr/decision/2011/2011159QPC.htm :

5. Considérant que la disposition contestée institue une règle matérielle dérogeant à la loi étrangère désignée par la règle de conflit de lois française ; que cette règle matérielle de droit français trouve à s'appliquer lorsqu'un cohéritier au moins est français et que la succession comprend des biens situés sur le territoire français ; que les critères ainsi retenus sont en rapport direct avec l'objet de la loi ; qu'ils ne méconnaissent pas, en eux-mêmes, le principe d'égalité ;

6. Considérant qu'afin de rétablir l'égalité entre les héritiers garantie par la loi française, le législateur pouvait fonder une différence de traitement sur la circonstance que la loi étrangère privilégie l'héritier étranger au détriment de l'héritier français ; que, toutefois, le droit de prélèvement sur la succession est réservé au seul héritier français ; que la disposition contestée établit ainsi une différence de traitement entre les héritiers venant également à la succession d'après la loi française et qui ne sont pas privilégiés par la loi étrangère ; que cette différence de traitement n'est pas en rapport direct avec l'objet de la loi qui tend, notamment, à protéger la réserve héréditaire et l'égalité entre héritiers garanties par la loi française ; que, par suite, elle méconnaît le principe d'égalité devant la loi ;

The new disposition neatly sidesteps this by placing all heirs, at least within the EU, on an equal footing in relation to the new prélèvement.

The EU position

Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 (The EU Succession Regulation) prescribes what is known as a unitary succession and does not in principle permit this type of schismatic morcellement of a succession between the laws of EU Member States or between a Member State and a foreign jurisdiction whether that law be invoked by the choice of the testator -that of nationality - or by default the law of the habitual residence of the deceased outside France. France should have moved from the duallist or schismatic approach which it shard with amongst other the United Kingdom to the unitary approach in 2014

The French Government's explanatory document for the proposed change can be found here and its reasoning is as follows:

La loi comporte en outre des dispositions destinées à préserver la dignité de la personne humaine, et notamment à:

Ø Lutter contre des pratiques qui dégradent la dignité de la femme, en pénalisant la délivrance de certificats de virginité;

Ø Renforcer les pouvoirs des officiers d'état civil pour prévenir les mariages forcés ;

Ø Mettre fin à l'application de règles successorales étrangères sur notre territoire qui lèsent les femmes ;

Ø S'assurer qu'aucun avantage ne puisse être tiré d'une situation de polygamie.

The rationale behind the drafting is thus "clarified".

Under the foreign laws which are rendered applicable by the European Succession Regulation, an increasing number of French resident women and girls of foreign extraction were finding their succession rights subject to foreign laws, which may operate against French women in succession matters when compared to the indigenous French rules. For example, a foreign law permitting polygamy might require a polygamous deceased husband's assets to be shared equally between their wives, thus reducing the French resident woman's rights to below those to which she would be entitled under French law. One might argue that if the foreign law enables that, then that is what the applicable law is. The effect is also the same for daughters who under certain foreign religious laws have a reduced entitlement to their brothers. Whilst that can be explained by a correlated duty of aliments and financial support by the male progeny to their surviving mother, what is not taken into consideration is that each child, irrespective of gender (and indirectly their spouses), in France can have be called to a duty of alimony to their parents.

But that is not where the matter ends. English law is said to give rise to absolute testamentary freedom. An individual can leave their entire estate to their spouse by will, and at least  until recently there was little recourse for Children to set aside gifts or legacies made to Charities and other unrelated persons by a deceased. The Inheritance (Provision for Family and Dependants) Act 1975 does provide a different remedy for persons supported financially by the deceased, but it is not equivalent to the French réserve or child protection regime. It has been deployed by French notaires to attempt to reallocate shares in successions governed by English law under the EU Succession Regulation, but its dissimilarities and the fact that it only applies to estates of individuals domiciled in the United Kingdom, not universally, and has to be applies for in a judicial procedure renders its assimilation to a réserve difficult. It will be interesting to see whether and if so on what basis, this limited protection is considered to be sufficient in France.

There is therefore an element of positive discrimination in the proposal seeking to rebalance what is perceived to be an injustice on French residents over the sharing out of French situs assets under a foreign law which to which French republican principles were irrelevant. Its benefit is also extended to EU nationals and residents so as to elude at least in part the decision of the French Conseil constititionnel in in Mme Elke B (see above).

Whether the political reasoning is clear or not is not relevant, the question is what exactly is proposed to be enacted - which is actually very different. The political statement refers to women being treated less favourably. The wording of the law goes much further than that.

Commentators in France immediately seized upon the issue of a breach of the European Succession Regulation whose articles 21-23 otherwise appear to finalise the issue against this intrusion. If the law of the State governing the succession is that of a Third State (including the United Kingdom which did not sign up to the Regulation), which can be that of a shari'ah or other state permitting polygamous or unequal shares or that of a State which has no reserved heirship rights and testamentary freedom, then that Third State's laws as to polygamous entitlement and the cutting out of received shares applies, in principle.

However, that analysis does not take into account the potential effects of article 10 of that Regulation which reads as follows:

Article 10

Subsidiary jurisdiction

1. Where the habitual residence of the deceased at the time of death is not located in a Member State, the courts of a Member State in which assets of the estate are located shall nevertheless have jurisdiction to rule on the succession as a whole in so far as:

(a) the deceased had the nationality of that Member State at the time of death; or, failing that,

(b) the deceased had his previous habitual residence in that Member State, provided that, at the time the court is seised, a period of not more than five years has elapsed since that habitual residence changed.

2. Where no court in a Member State has jurisdiction pursuant to paragraph 1, the courts of the Member State in which assets of the estate are located shall nevertheless have jurisdiction to rule on those assets.

 

The the drafting of the French provision resonates or even echoes of this wording, but it does not stand on all fours with EU definition in that the French provision defines the right to its prélèvement by reference to the the nationality or the residence of the heir not by reference to that of the deceased. Whether all heirs can march into France to claim inthe tracks of a disgruntled EU resident or national sibling is the next question. Equality suggests that they can.

Generally speaking until now article 10 has always been read as requiring a Member State taking a "subsidiary jurisdiction" to rule using the law laid down required under articles 21-23 and not to substitute its own rules such as a reserved heirship or a prélèvement of the type introduced in article 913 of the French Code civil as from 1st November, 2021. Might it have been the intention of the French legislator to slip a sharp  misericord between the armour plates of the Regulation as applied by foreigners in France, or to require a notaire to do so in their place? It looks as if that is the case.

It might therefore come a surprise to find that the introduction of the proposed law "comforting Republican principles" which the French Government proposed to the Conseil des Ministres on 6th December, 2020, and which has now been proposed to Parliament read as follows (my lay translation):

Chapter III sets out provisions destined to protect teh dignity of the human person. Article 13 aim so reinforce the protection of reserved heirs. Article 913 Code civil is completed by ensuring that every child wo is a legal heir takes their rights without any distinction being made on discriminatory criteria. A new type, of right to a compensatory prélèvement (legitime) is proposed which will allow every child omitted by the deceased to recover the equivalent of their reserved rights from the assets situated in France once the foreign law allows their disinheritance from the succession. This prélèvement right will apply where the deceased or one of their children is a national of a Member State of the European Union, or is habitually resident there at the date of death. A new paragraph is also inserted into article 921 of the same code o ensure that the reserved heirs are made aware of their right to initiate an action en réduction. These provisions also require the notary to clearly and precisely inform each of the heirs whose interests are potentially subject to being harmed by liberalities given by the deceased prior to the estate (i.e. the assets in France) being allocated and administered  . It lays down an obligation on the notary to inform fully with the aim of ensuring that the heir makes a free and informed choice at the moment of exercising or not exercising the right to reduction.

Note that the prélèvement is to be applied where a "deceased or one of their children is a national of a Member State of the European Union, or is habitually resident there at the date of death".

In other words, where a non-EU resident individual dies, an heir who is a non-EU national but who is resident within the EU can now come to France to counterbalance any shortfall in their inheritance by claiming against French situs assets, using the French réserve as a reference point as against the whole foreign succession. The remedy is not limited to the succession of deceased EU nationals.

This is an astute attempt to sidestep the issue raised in the QPC Mme Elke B. referred to above at its §6. It is not by simply including other EU nationals and habitual residents within the EU, and discriminating against those outside it that any equality of treatment is engaged. The only manner in which that Elke B circle could be squared would be by giving every disadvantaged heir in a non-EU succession, irrespective of their nationality or state of residence, the right to be called in to the French succession, to appear before the notaire and take a compensatory share out of the French assets involved.

This has precious little or even nothing to do with the opening description of the raison d'être for the amendments, as several EU Member State, no longer including the United Kingdom (save Scotland's legitime), do not have any equivalent or forced or reserved heirship régimes and allow complete testamentary freedom. The Inheritance (Provision for Family and Dependants) Act 1975 which does not extend to Scotland or Northern Ireland. does not equate to a réserve as it requires a degree of financial dependency, not a blood line link, and also only applies to the estates of deceased individuals domciled as opposed to dying habitually resident, in England and Wales.

Were I to be sceptical, I might add that it appears to be aimed, not only at polygamous marriages or at shari'ah type gender discrimination, but at precisely the type of Succession Regulation planning carried out in France by serially monogamistic British residents and nationals with a view to excluding French reserved heirship rules under the Succession Regulation.

That has not escaped the attention of such as Professor Hélène Péroz of the University of Nantes who consider that the prélèvement in its proposed form resent for is simply unworkable. See here.

I summarise her queries as follows:

  1. Putting a prélèvement in place appears totally in contradiction with the EU Succession regulation. How can an EU Member State reduce or modify the scope of application of a European Regulation?
  2. What happens when the French Court is not competent to adjudicate over the Succession and has to apply the law of another Member State?
  3. How is the morcellement or schism between the unitary law imposed by the EU Regulation and what is effectively a duallist approach under the French Code civil to be managed when Considerant 37 or the Regulation expressly prohibits it?
  4. As the criteria of application are, firstly the presence of assets in France and secondly the residence in the EU of the heirs or the residence/nationality of the deceased, does the matter not fall as unconstitutional following the decision of the QPC on the prior prélèvement? How can a Court apply the prélèvement equally when the deceased was not resident in the EU and only one of the heirs lives in France or the EU, and the others live outside it? Can the Court apply the right of prélèvement to all when only one actually fulfils the criteria for application of the prélèveement? It appears to be the case
  5. The breach of the principle of equality between heirs where there are assets in France, but the deceased was neither resident within the EU or an EU national having "opted" for the law of his nationality to apply?
  6. What happens where the foreign law has a reserved portion or an equivalent, but it is more restricted or of a lesser percentage than the French equivalent (cf Jersey restricts its legitim to movables and leaves immovables to devolve or be left under absolute testamentary freedom).
  7. What happens where there is no reserve under the foreign law otherwise governing the succession but the deceased has in fact gratified their children, but in lesser proportions to those envisaged under the Code civil?
  8. What happens where there is litigation pending elsewhere and also where there is incompatibility between foreign juridical decisions and the French prélèvement rights? Will res judciat apply?

Whilst these are only initial reflections from a French Agregée University Professor of Law, it is clear that the proposal itself does not square with the political statements justifying its implementation, and secondly that it flaunts French exceptionalism before the European Union as a whole.

My main concern is specifically for British residents and nationals, including Channel Islanders who have based their succession planning in France on what is in fact a solid foundation, that is the Succession Regulation.

It is clear that whatever your patrimonial situation in France you will need advice on these potential changes which the majority of English advisors may well be unable to address. .

The draft is not good legislative practice. It is presented under what are palpably false pretences and takes on a legally binding piece of European legislation within the European legal area in a very amateurish manner.

It could be described as not addressing what it was stated to do, and merely renders the lives and deaths of Europeans and also those from Third States who are not communautariste even more complex and worse uncertain than before.

It is also unclear to what extent any surviving spouse's rights can be considered as those of a réservataire in the case of a second marriage with children from prior unions. The recent changes in spousal rights indicate that they may now be.

These are comments, and not advice. There is no legal relationship created by this document with those who read it. If anyone wishes to obtain specific advice on their position please contact Peter Harris on + 44 1534 625879, or by e-mail to peter.harris@overseaschambers.com.