Lasting Powers of Attorney: recent key developments
Prior to the passing of this French law, under EU law an international individual with French and English* links and UK nationality could elect for English law to apply to their worldwide estate. Alternatively, if that individual never made any such nationality election but died habitually (i.e. long term) resident in England, EU law dictated that English succession law would again apply to their worldwide estate (including their French estate).
With the UK not being subject to this EU law, English law does not always mesh perfectly. English law** instead firstly applies the test of ‘domicile’ (a different test to long term residence – it is driven by case law and could be described as the one place where the individual can be proved to have had a permanent or indefinite intention to locate to). Secondly, English law distinguishes between types of property, ‘immovable’ being essentially real estate and ‘movable’ being everything else. English law states that an individual’s worldwide estate will devolve under the law of their domicile as to their worldwide movable property. However their real estate will devolve according to the law where each piece of real estate is located.
EU law was prepared for this clash; where the international individual had not made a clear nationality election for English law to apply but nevertheless died habitually resident in England thus meaning these EU rules applied somewhat by default, the EU jurisdiction in question would accept the referral back from English law. For example, if an English person owning French real estate died habitually resident in England, although EU law would initially indicate that the French real estate should devolve under English law, when English law referred this back to French law, French law would accept this.
Whereas if an individual had made a valid nationality election for a certain succession law to apply, EU law would not allow the referral, presumably on the basis that the individual had made a conscious choice for one succession law to apply to their worldwide estate. Using the same facts above, if that English person had made a nationality election for English law to apply their worldwide estate (including the French real estate), EU law would not allow the French courts to accept the English courts’ referral to French succession law for the French real estate. Instead, the French courts would be obliged to apply English succession law to the French real estate, regardless of the position of the English courts. In practice this would probably be resolved by an English legal expert providing an opinion upon the hypothetical operation of English succession law to the French lawyers involved.
Whilst far from perfect, the above rules at least mapped out routes an Anglo / French individual could take to increase certainty in their succession planning.
Clearly, however, certain parts of the French legislature consider the EU rules that oblige French authorities to apply the succession laws of another jurisdiction too far reaching. The particular concern seems to be that an international individual with French links might wilfully circumvent French rules that guarantee a portion of the estate to the deceased’s children. Accordingly, in the words of our French contact, as from 1 November 2021, the new French civil code article will read:
When the deceased, or at least one of his/her children, is, at the time of death, a national of a Member state of the European Union or has his/her habitual residence there, and when the foreign succession law does not know a mechanism with a reserved portion protecting the children, each child (or his/her heirs, or those who benefit from his/her rights) can use the assets which are located in France to obtain a compensation at the time of death, in order to benefit from the forced heirship rights which they have under French law, within the limits of these rights.”
The English jurisdiction with its so called ‘freedom of testamentary disposition’ could be one such jurisdiction these members of the French legislature were seeking to protect against. Although it is not yet possible to know how these new rules will be applied, our French contact bringing this to our attention fears that the English Inheritance (Provision for Family and Dependants) Act 1975 may not provide enough protection for the deceased’s children to satisfy this new French rule. Accordingly, it seems there will be cases where EU law will dictate that English law should apply, but the French rule will differ. Following the French rule in practice would involve the French authorities re-allocating French assets so that the deceased’s children receive as much of the French reserved portion as can be achieved with French assets alone.
Although Brexit has been massively challenging in all other areas for an Anglo / French individual, following our exit from the EU in January 2020 if that person and their children now do not fulfil the geographical criteria of being a national of, or habitually resident in an EU members state, the ambit of this new law will not touch them. Accordingly, the new rules are unlikely to extend to the UK by virtue of it no longer being an EU member state. Contrast, for example an Irish person in the same position – simply by virtue of Ireland being an EU member state that Irish person with French links would be subject to this French law if, according to this French law, Irish law does not reserve enough of a portion for children.
This law is controversial because it clashes with EU law which is supposedly dominant to the French legislation. This will, no doubt, come before the French courts and it remains to be seen how they, and if necessary, the EU courts of appeal unravel these inherent conflicts. In the meanwhile, unfortunately it creates new uncertainty in the sphere of planning for international individuals with French links who desire anything different from the strict French forced heirship rules prescribing that the majority of their estate must pass to their children.
At Kingsley Napley, one of our specialisms is providing international individuals with English law succession and inheritance tax advice. We co-ordinate with foreign lawyers and tax specialists to ensure the English and foreign advice blend as well as possible.
*Diane Le Grand de Belleroche of BeFair Avocats, Paris.
**We use ‘English’ and ‘England’ as a shorthand for the legal jurisdiction of England and Wales (apologies to Welsh readers).
*** Or more precisely ‘English private international law’.
Joseph Austin is a Senior Associate in the Private Client Team. He specialises in the administration of deceased persons’ estates (probate), with a particular focus on:
Laura Harper is a Partner in the Private Client team. She advises both UK resident and non-UK resident/domiciled individuals, families and trustees on a wide variety of UK tax, trust law and international estate planning issues, including the planning to be undertaken when moving to or from the UK. She also has extensive experience working on cross-border matters and structuring involving family-owned businesses.
As non-UK tax residents, the couple will be subject to special rules for calculating the capital gains tax (“CGT”) due in relation to either the sale or transfer of their UK property.
The last 12 months have put an awful lot of pressure on the family unit and sadly this has led to a spike in separation and divorce amongst married couples. With the end of the tax year fast approaching (last day Monday 5th April – Easter Monday) it is timely to consider the tax consequences of separations.
The coronavirus crisis has caused huge disruption across the world. The distress that it is causing is compounded in circumstances where intended parents of surrogacy children are in the middle of their surrogacy journey. In this blog, we address some of the most common issues people are experiencing and provide practical tips on how to navigate the current situation. These challenges include access to fertility treatment, pregnancy and birth, international travel restrictions, immigration status, parental orders and Wills among others.
With an increase in the number of client wanting to write new, or update existing, Wills or Lasting Powers of Attorney while either self-isolating or remaining within the government's social distancing guidelines, Diva Shah discusses the possible changes to the Wills legislation.
Anxieties to put a Will, or new Will, in place may be heightened by the difficulties in executing a will in the presence of two witnesses at a time of social distancing and isolation. But for some of us, more than ever alert to the reality of our own mortality, would dying without a will really be a complete disaster for our assets and our family – or would things work out OK?
International clients with a UK footprint often like a good spread sheet: specifically, a spread sheet covering their days spent in the UK and those spent overseas in the period 6 April to the following 5 April. This period is the UK tax year, and well-advised international clients – those considered neither resident nor domiciled in the UK - are all too aware that not keeping track of their UK day count may make them UK resident and within scope of UK income and capital gains tax on their worldwide income and gains. Numbers matter.
The news is dominated at the moment with the dreaded C word – COVID-19. Our TV screens, phones and newspapers are filled with the death count, panic buying and now “lockdown”. For many, being isolated or maintaining social distancing means that you may well be thinking about your future.
In the current crisis, we find ourselves with time (perhaps too much time…) for worry and reflection over an uncertain future. That reflection could usefully and responsibly be channelled, in part, to issues of Wills, tax planning and general succession.
Skip to content Home About Us Insights Services Contact Accessibility