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Changes to the law on inheritance, ownership ‘en indivision’, gifts,
PACS and changes of matrimonial regime
A law
of 23rd June 2006 has brought in changes, some of which are
of quite considerable import, on inheritance, ownership ‘en indivision’,
gifts, PACS and changes of matrimonial regime. The new legislation will
only apply from 1st January 2007. This article will
provide a summary of some of the most significant changes which could
affect foreigners in relation to the inheritance of property in France.
(1) Representation
Representation is the process whereby an inheritor is replaced by
another on a lower inheritance rank e.g. if a parent has lost a child,
the grandchild will replace the deceased child under representation when
the parent passes away. The legislation now allows the descendants or
privileged inheritors of the inheritor who renounces to benefit from
representation. Therefore, if the child of the deceased renounces to
the inheritance, that person’s own child or children (e.g. the
grandchildren of the deceased) will have the same rights as the
renouncing parent under the rules of representation.
(2) Removal of the protected rights of ascendants
Ascendants (e.g. parents) were forced heirs (‘réservataires’) in the
absence of children. As a result they benefited from protected rights
in relation to the estate of their children, even if married, and were
entitled to a minimum ¼ each. Under this new legislation they are no
longer forced heirs (‘réservataires’) and so can be disinherited.
However, they are still on the same inheritance rank and so will inherit
if they are not specifically excluded by way of will or similar.
(3) Renunciation in advance to exercising the action in
‘réduction’
The
action in ‘réduction’ is the means by which a forced heir (‘réservataire’)
can claim back the inheritance that he or she has been deprived of. If
there is a will that exceeds the available quantity and impinges upon
the protected interest of an inheritor, that person can recover what is
reserved to him or her by means of this action. The law now allows the
forced heirs to renounce in advance to exercising this action. The
formalities are heavy: it is necessary to sign a specific authentic deed
witnessed by two notaires. Each person who renounces must sign in the
presence of the notaires alone. Therefore, children could theoretically
renounce in advance to the inheritance of their parents, thereby
allowing parents to leave the property to each other under the terms of
their wills.
(4) ‘Graduated’ bequests
It is
now possible to make ‘graduated bequests’ by either will or gift (liberalités
graduelles) whereby a bequest is made subject to the condition that the
beneficiary who receives it must transmit the property or rights object
of the bequest to a second beneficiary upon his or her death.
(5) Opting to accept an inheritance
It is
now possible for joint inheritors, inheritors on a lower rank and
creditors to summons any inheritor who has not opted to accept the
inheritance during the four months after death to take a stance in
relation to the inheritance. The inheritor then benefits from two
months to opt. If he or she does not renounce then he or she is deemed
to have accepted the inheritance. If there is no summons then the
option is proscribed after ten years (rather than the previous thirty
years) e.g. the inheritor who has not opted is deemed to have renounced
after the expiry of this period.
It is
now possible for the inheritor who has purely and simply accepted to
request discharge from liability for debts about which he or she had
good reason to be unaware and which would seriously compromise his or
her assets. The rules relating to acceptance following inventory have
been modernised and this procedure is now called ‘acceptation for the
amount of the net assets’ (‘acceptation à concurrence de l’actif net’)
(6) Posthumous power of attorney
It is
now possible for a person to designate an attorney to manage all or part
of the probate after his or her death. The power of attorney must be in
authentic form (e.g. in an act witnessed by a notaire) and must be
accepted by the attorney prior to the death. It must be on behalf of
and in the interest of one or more inheritors and must be motivated by a
serious and legitimate interest. It is limited to two years which can
be extended by court order. It can be for five years if the incapacity
or age of the inheritors justifies it or if there are business assets to
manage.
(7) Alteration of the rules of ‘en indivision’
The
rules relating to co-ownership ‘en indivision’ have been altered.
Instead of unanimity, a majority of 2/3rds is required for acts of
administration as well as the renewal of leases. It is necessary for
all co-owners to be informed about the acts undertaken in order that
they can be opposed against them. However, unanimity is still required
for all acts that are not part of the normal exploitation of the
property and for all acts of disposal (e.g. sale or mortgaging),
excepting the sale of furniture in order to pay the debts and
liabilities of the co-ownership. The rules governing ‘partage’ (e.g.
the ending of an ‘en indivision’ by dividing of a property) have been
loosened in certain cases to facilitate amicable settlement without
going through full court proceedings.
(8) Extension of the rights of handicapped people
The
rights of handicapped people to make wills and gifts have been extended
to enable them, subject to conditions, to benefit from a greater freedom
to dispose of their assets.
(9) Rewriting of the rules relating to executors
The
rules relating to executors have been rewritten. The role of an
executor remains unchanged e.g. to ensure that the deceased’s last
wishes are respected. However, the executor is now obliged to uphold
the validity of the will and he must then respect the terms of the
bequests. He must take all necessary measures to conserve property
required for the proper execution of the will. He can draw up an
inventory and has more extensive rights in relation to sale of assets
and property when authorised, particularly in the absence of ‘forced
heirs’ (‘réservataires’). These changes will make the role of an
executor closer to that known under Anglo-Saxon legal systems.
(10) Extension of the rules of ‘donation-partage’
A
‘donation-partage’ is a mechanism whereby a person makes a gift to his
or her beneficiaries and at the same time divides the assets object of
the gift between those beneficiaries. It is now possible for a person
to do a ‘donation-partage’ between his presumptive inheritors (e.g.
those inheritors who are legally designated as the beneficiaries in the
absence of a will to the contrary). For example, a person without
descendants or ascendants can do a ‘donation-partage’ to the benefit of
his or her brothers and sisters. It is also now possible to do a
‘donation-partage’ between descendants of different ranks e.g. between a
child and grandchild.
(11) Reform of PACS (pacte civil de solidarité)
The
PACS is a contract between unmarried people governing the ownership of
their assets. It can now be concluded in authentic form (e.g. by way of
an act signed in front of a notaire) and presented to the secretariat of
the county court for registration. This fills a lacuna under the
previous legislation. The relations between the partners are now
brought closer to those of husband and wife. The rules governing the
duties and obligations of husband and wife such as communal life,
reciprocal assistance, material aid are now applicable to the PACS. The
regime of ownership of the assets becomes that of separate assets (‘séparation
de biens’) with rules similar to the regime between spouses. However,
it is possible to opt for a regime closer to that of community of assets
(organised ‘en indivision’). In addition, the surviving partner will
now benefit from a temporary right to the lodging that is the main
residence of the partners upon the death of one of them (provided that
this right has not been removed by way of will). The survivor can also
benefit from the right to require the preferential attribution of the
lodging and furniture if the deceased specifically allows this in a
will.
(12) Alterations to changes of matrimonial regime
A
change of matrimonial regime no longer requires court ratification, save
in the case where there are minor children where ratification remains
necessary (note that court ratification is not normally an issues for
foreigners who undertake a change of matrimonial regime in the context
of a French property purchase, although it would be relevant to a
subsequent alteration of the French regime). The children who are of
majority must be personally informed of the project to modify the regime
and creditors are informed by publication in the legal announcements of
a newspaper. If they oppose then court ratification becomes necessary.
One modification which is potentially of
great significance to foreign purchasers concerns the possibility
for the children who are not of the marriage (e.g. children from a
previous marriage or relationship) to renounce to the legal action to
overturn the change of matrimonial regime (‘action en retranchement’).
The formalities required are those mentioned in paragraph 3 above. This
means that it will be possible in certain cases to allay the fears of
those who wish to do a change of matrimonial regime to adopt the regime
of la communauté universelle.
13/09/2006
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Legal update
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