European Regulation No. 650/2012 of 4 July 2012, applicable to all successions opened on or after 17 August 2015, has brought about profound changes in inheritance law within the EU by standardising the rules applicable to international successions.
It was also designed as a estate planning tool in that it allows for professio juris, i.e. the possibility for the deceased to specify in advance the law applicable to his or her succession, thereby resolving the uncertainty surrounding the concept of “habitual residence”.
The European regulation provides that it is the habitual residence of the deceased that determines the law applicable to his or her succession, habitual residence being a hybrid concept that takes into account the circumstances of the deceased's life in the years preceding death and establishes the existence of a close and stable connection with the state concerned.
However, in practice, it is often the case that the deceased has not expressed his or her wishes, either because there are no provisions in their will or because the provisions did not expressly mention the chosen law (or were too vague to avoid disputes over the deceased's implied wishes).
This lack of reference has serious consequences, since the succession, in accordance with the principle of habitual residence, may be governed by a law that was not the one chosen by the deceased, and undesired rules may be applied.
In the context of international mobility, it is therefore important to plan your succession and, in particular, to make an express choice of the applicable law in your will.
Please note, however, that this arrangement has its limitations!
However, the choice of law does not guarantee the application of the applicable law designated by the deceased’s in his or her will. In addition to the standard exceptions provided for in the European regulation, the French Law No. 2021-1109, published on 25 August 2021 and applicable to estates opened on or after 1 November 2021, has introduced a new legal right to a compensatory levy that may override the wishes expressed in a will.
Indeed, Article 913(3) of the Civil Code provides that if the deceased or at least one of his or her children is, at the time of the death, a national of a Member State of the European Union or habitually resides there, and if the chosen law applicable to the administration of the estate does not provide for any mechanism to protect the children's reserved portion, each child or their heirs or successors may make a compensatory levy on the assets existing in France on the date of death, so as reserve for them those rights guaranteed to them by French law, within the limits of those rights.
If the three conditions set out in the article are met (the deceased owns movable or immovable property located in France, their estate is subject to foreign law pursuant to the European Regulation on international successions, and the deceased or at least one of his or her children is, at the time of death, a national of a Member State of the European Union or habitually resides there), the children may benefit from this right, regardless of the choice previously made by their father or mother.
However, this provision is widely contested as it conflicts with the provisions of the European Regulation on International Successions (in particular the principle of legal certainty) and internal rules, to such an extent that it is highly probable that it will be challenged, although it is impossible to predict how long it will remain in force.
Given the uncertainty surrounding this right to a compensatory levy, in estate planning, only the “advance waiver of the right to bring an action for reduction” provided for in Article 929 of the Civil Code would appear, for the time being, to be the manner in which this risk can be eliminated, although this can sometimes prove difficult to put into practice.
If a descendant claims a right to a compensatory levy, if the executor or heirs wish to oppose, one solution may be to refer the matter to the CJEU for a preliminary ruling, which would suspend the proceedings before the French tribunal pending the CJEU's examination of the question of law, in the hope that the law providing for compensatory levy would be declared non-compliant with European regulations and therefore unenforceable.