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Slater and Gordon Lawyers can advise and assist with French Property Wills. Call our specialist lawyers on freephone 0800 916 9083 or contact us online.
Many people believe that since Art.22 of the European Union Succession Regulation (EU) No 650/2012 (“SR”) came into effect on 17th August 2015, they no longer need to be concerned by French inheritance laws or French property Wills but this may not be the case owing to other changes in French law, particularly in relation to trusts.
French inheritance laws apply to a French resident’s entire estate (except for real estate outside France which could devolve under the lex situs (law of country where it is located).
EU citizens may be able to choose the law of their nationality as the law to govern their succession as a whole as a result of Art.22 of the SR but the UK, together with Denmark and Ireland, has opted out of this regulation and are not bound by the SR or subject to its application. It is uncertain whether these countries will nevertheless fall within the SR definition of a ‘member state’, permitting (as a matter of European policy) the succession law of those countries to be recognised and enforced throughout the EU. It may remain open to interpretation for now, with any uncertainty only being resolved in due course by decision of the EUCJ (European Courts).
For those who do wish to have the law of England and Wales apply to their estate, their French Property Wills can make provision to cover both possibilities i.e. where it is deemed to apply at the time of their death and, alternatively, where it is not.
Recent changes to French law regarding trusts, their taxation and reporting obligations, could have serious consequences for UK owners of French property whether the property is expressly held in a trust or simply dealt with by a UK Will or codicil.
The French definition of a trust is now very widely drawn and the vesting of an English estate in its Executors, whilst they administer it (under a Will or intestacy) could be interpreted as creating a “bare trust” under this new definition, resulting in stringent taxation and reporting obligations being applied.
Consequently, in order to avoid any potential problems, property owners should consider making a French form of Will which relates solely to their immovable property/real estate in France.
The Testament Olographe (holographic Will) is probably the most common form of Will in France and, amongst other formalities, must be entirely handwritten. There is no legal requirement to register a holographic Will in France but a French language version of the Will can be registered by a notaire in France at the Central Wills Registry (Fichier Central des Dispositions de Dernières Volontés).
A Testament Authentique, a much more formal format, must be drawn up by a French Notaire and witnessed by two witnesses in France or by two notaires. These must be registered at the central registry in France and are considerably more expensive so generally less popular in France.
You will need to ensure that a valid French Will drafted by a notaire in France also takes account of the law of your country of residence. It is vital that the notaire understands your instructions and that you understand what you are signing. Keep a copy or the original and place it with your English Will or send it to your solicitors.
Always let your UK Wills solicitors know about the existence of any foreign Will (in addition to your UK Will) and keep them up-to-date with any proposed changes in relation to these. It would be prudent to contact your solicitor for advice before opting for English law to apply to your entire estate to check on any possible wider-ranging consequences (e.g. on their worldwide estate) before doing so.
Whilst the recent changes may affect how an estate devolves, they will not remove any problems relating to French inheritance tax (IHT); this will still be payable in France by the individual heirs, no matter which national law is applied.
Unlike in the UK, where the entire estate is taxed, IHT in France is paid by each individual beneficiary and the tax-free allowances, taxable inheritance and tax rate applicable vary depending on the relationship of the beneficiary to the deceased. Spouses and (French and UK) civil partners now benefit from an exemption from French IHT; however, at the other end of the scale, unrelated heirs pay tax at the punitive rate of 60%.
For those domiciled in the UK, their French property will be included in their UK probate declaration also. A credit should be given for French IHT paid.
Warning: A French Will may inadvertently revoke your existing English Will (as can a change in your marital status). Similarly, the French Will could be accidentally revoked by a later English Will. Always ensure that you and your lawyer consider all your Wills when updating any one of them.
Speak to the International Property specialists at Slater and Gordon to find out how to update your Will.
For help and advice on French Property Wills call our specialists today on freephone 0800 916 9083 or contact us online.
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