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PacisLexis Family Law
International inheritance lawyer
Definition
International inheritance
Inheritance is the process by which the ownership of a deceased person’s property and assets (testator) is transferred to their heirs.
When it comes to legacy and the share of assets, as each country has its own laws and regulations, international inheritance requires legal advice.
There are 2 main types of international inheritances:
- Cross-border inheritance: it’s typically when the testator has assets and properties in different countries where the testator is neither resident nor a citizen and dies in another country.
- Domiciled inheritance: domiciled is a legal concept that describes the country in which a person has their permanent home. This means that even if a person lives outside their country at the time of their death they could still be in their citizenship country domiciled.
Inheritance with a beneficiary leaving abroad
If you are a beneficiary or a heir and inherits money or estate from abroad, there may be inheritance taxes on the estate of the testator. Indeed, tax aspects of international inheritances can be tricky.
Each country has its own tax rules. This can lead to situations where the beneficiaries must pay taxes in more than one country and face legal and administrative issues.
With international inheritance the beneficiaries or heirs must determine the applicable law to avoid paying taxes twice. This is typically the case when countries follow a civil law based system for legacy while others follow a Common Law one.
In this article we will focus on the differences between the French inheritance system and the Common Law one and to explain how you can avoid issues if you are a French citizen living abroad or have assets and properties in a different country(ies).
Dividing assets and properties can be hard on family members of a testator. Therefore, our firm can assure you to lead you with empathy and compassion in this difficult time.
We can set appointments within 48 hours in our office or by video chat.
International inheritance lawyer
Managing cross-border inheritance and EU succession regulation
What is cross border inheritance?
First at all in order to settle an international inheritance, it’s advisable to determine whether it’s a succession within Europe or outside of Europe.
The aim of the regulation is to harmonise and simplify cross-border successions across EU countries.
Cross-border inheritance or succession applies where an estate has elements from different jurisdictions for example, if a testator domiciled in a country dies in another country.
What is the EU succession regulation?
The EU succession regulation came into effect on 17 august 2015 is to harmonise and simplify cross-border successions across EU countries and has established that the inheritance laws of the country of an individual is domiciled will apply to the devolution of their international estate.
This regulation applies to the following countries: UK, Germany, Austria, Belgium, Cyprus, Croatia, Estonia, Finland, France, Greece, Hungary, Italy, Leetonia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovenia, Sweden and Czech Republic.
Denmark and Ireland opted out, so the regulation doesn’t apply to these countries.
If you’re a uk citizen and have assets or estate in France, it’s important to get advice and to review your will.
What is the content of the EU succession regulation?
The regulation only determines complications and conflicts of law that arise in cross-border successions, it does not determine inheritance taxes and administrative issues.
- Applicable law when the succession occurs before the entry into force of the regulation.
To establish which laws apply to the devolution of assets it’s necessary to establish where they are situated.
In France, the applicable law varies for different groups of assets
- Real estate (immovable property): the applicable law is where the estate is situated
- Private assets and money (moveable property): the applicable law is where the deceased is domiciled at the time of his death.
- Applicable law when the succession occurs after the entry into force of the regulation.
There is a principle and an exception.
Principle:
If an individual :
- Is a French citizen
- If they are domiciled in an EU country other than France
Then the succession and administration law is the law of the individual’s habitual residence and heirs’ rights are governed by the individual’s habitual residence whether the beneficiaries live or not in the same country that the individual.
Exception:
There are 2 exceptions to the principle.
1st exception: connection with any of the EU member states
The regulation has provided an exception when the deceased had connections with an EU member state other than their last habitual residence at the time of their death. the applicable law can be the one where the deceased has strong connections.
For example:
Mr X. has all of his moveable property in Germany where he works 4 times a week; However his residence is in France where he lives with his family.
The point here is to know if he would not have more closest connections with Germany despite his last habitual residence was in France at the time of his death.
2nd exception: making an election
An election can be made in a will for the testator to elect the law that should apply to succession to all their moveable and immovable properties worldwide.
The chosen applicable law can be the law of the testator’s citizenship or testator’s habitual residence.
Where you have several citizenships, you will be able to choose between these.
What the applicable law will determine?
The applicable law will determine:
- Beneficiaries (example: partner/spouse, child(ren), parents…)
- Cutting someone from your will
- Legal reserve
- Transfer of property ownership to the beneficiaries
- Heirs’ rights
- Executor’s rights
- Sell T&Cs or debt refunds
However the applicable will not determine:
- Succession taxes
- The marital property dissolution
- Business owner issues
What is the applicable law when dealing with international inheritance disputes?
The regulation as in France, the applicable law is the law of the state where the deceased was resident at the time of death.
However, if the testator elected a state, it’s the law of this elected state that should apply to succession to all moveable and immovable properties.
International inheritance lawyer
The European certificate of sucession (ECS)
What is the European certificate of succession?
The ESC is a document delivered by an internal authority outlining the key elements of a cross-border estate administration. The document includes a breakdown of the beneficiaries’ shares, name of executors, administrators and their power.
Once delivered (by a Notary in France), the ECS will be recognised in the other member states and will evidence a beneficiary’s rights to the assets.
Please note that an ECS is not mandatory.
Is an ECS useful?
The ECS will be recognised in countries which have signed the ECR. In France, the Notary is responsible for delivering the ECS.
Once delivered, the ECS allows heirs to:
- Be recognised in the member states where the deceased has got assets and estates
- Be able to pay the succession fees and taxes
- Be able to get the ownership of all moveable and immovable properties.
Who can require an ECS certificate?
If you want to get an ECS, you must be:
- A heir
- A beneficiary
- An executor
- An administrator
A creditor can not get an ECS.
How to obtain an ECS?
You have to make an application however it’s not mandatory as the use of an ECS.
The application is a form and must include:
- The goal
- Information that a Notary would have requested.
Once the application is made, the ECS goes through the Notary.
Is an ECS applicable in the UK?
While the UK was a member of the EU until January 31, 2020, it’s important to note that the UK is no longer part of the EU.
Therefore, you cannot provide an ECS anymore in the UK. However, you can get a certificate of English law drafted and signed by a solicitor familiar with cross-border administration.
If you’re a French resident and have assets in another EU country it’s easier to get an ‘acte de notoriéte’. “L’acte de Notoriété” in English can be translated by Grant of probate.
What is a grant of probate under the Common Law?
A grant of probate is a legal document issued by a court that confirms the validity of a deceased person’s will and authorizes the executor named in the will to administer the deceased person’s estate. The term “probate” often refers to the entire process of settling a deceased person’s estate, including validating the will, identifying and inventorying the deceased person’s assets, paying debts and taxes, and distributing the remaining assets to the heirs or beneficiaries as specified in the will.
When a person dies and leaves a valid will, the executor named in the will typically applies to the probate court for a grant of probate. The court reviews the will to ensure its validity and confirms the appointment of the executor. The grant of probate provides the executor with the legal authority to carry out the instructions in the will and handle the deceased person’s affairs.
In cases where a person dies without a valid will (intestate), a similar legal process may be followed, but the court issues a grant of administration instead of a grant of probate. The person appointed to administer the estate in such cases is usually referred to as an administrator rather than an executor.
In such circumstances, PacisLexis Family Law strongly advice a testator to make separate wills under the law of each jurisdiction. The property governed by French law would be subject to the French forced inheritance rules. Indeed, the complexity and uncertainty of cross-border succession make it more likely that disputes will arise in the first place dragging those concerned into expensive litigation.
International inheritance lawyer
Outside of Europe international inheritance
What is inheritance outside of Europe?
International inheritance occurs when the testator:
- Was domiciled in a non-EU country
- Owned assets and estate in foreign countries outside of the EU.
Does the EU regulation is also setting the rules regarding applicable law outside of Europe?
No!
In countries where the regulation applies, the default position will be the law of the country you are resident at the time of your death.
You can make the choice of the country within your will.
In common law jurisdictions, the residence of the person will govern which system of law is applicable to different classes of assets. Common law jurisdictions generally allow complete freedom as to devolution of assets. It means that you can choose the English law jurisdiction for you moveable properties and if you have estates in another countries the applicable law will be where your estates are.
Please note that the effect of the testator’s marriage being subject to community of property laws will affect your will. A change of matrimonial domicile can lead to a change in the matrimonial property regime.
What is the applicable law for non-EU successions?
As seen previously, the applicable law is related to your marital property regime and also to your matrimonial domicile.
The law of succession is the law of the person’s residence and this single law governs the worldwide estate.
For example :
- If you’re a French citizen
- Your marital home or main residence is outside of Europe (Brasilia, for example)
- Leaves assets and estates outside of Europe and in France,
All assets and estates will be governed by the country where the testator dies at the time of their death, here in our example, the Brasilia law.
The domicile and citizenship of the beneficiaries will not be taken into account.
Can a foreign will be valid in France?
Yes!
Succession rules can be totally different from the French ones.
However, it will be completely unfair to invalid a foreign will in France whereas it is valid in a foreign country.
Therefore, if a testator has their domicile in France at the time of their death and has made a will in a foreign country, they possibly could make it valid in France.
For example:
Mr Little has written a joint will in Sir-Lanka.
Regarding the article 968 of the French civil code, a joint will is not allowed in France. However, the Sir-Lanka jurisdiction allows it. After being checked by a Notary if the will is correct and follows the Sir-Lanka law, the joint will can be valid in France and can be applicable.
International inheritance lawyer
International inheritance taxes
Is there a deadline for serving an international estate certificate?
Yes!
The deadline for heirs to submit the international estate certificate is as follows:
- Within 6 months upon the date of the testator’s death if the death occurred in France,
- Within a year upon the date of the testator’s death if the death occurred in a foreign country
The submission of the certificate triggers inheritance and transfer rights. It’s at this point that taxes will be calculated.
After the deadline is passed, interest can be charged, and beneficiaries or heirs will have to pay them.
What is a double taxation convention?
Double taxation treaty is an agreement between 2 states which are designed to:
- Protect against the risk of double taxation where the same income is taxable in 2 states
- Prevent excessive foreign taxation and other forms of discrimination against FR/UK/USA etc business abroad and provide certainty of treatment for cross-border trade and investment.
France has signed more than 3K double taxation conventions.
A double taxation convention has been signed between UK and France in London on 19 June 2008 and entered into force 18 December 2009. The convention has been effective in UK from 1 April 2010 for corporation tax and from 6 April 2010 for income tax and capital gains tax. The convention has been effective in France from 1 January 2010.
In the UK to avoid double taxation, you have to fill up a 226 form France-individual to apply relief at source or to claim repayment of UK income tax.
How double taxation convention works?
You may be taxed on your foreign income by the country where you’re resident and by another. You may not have to pay twice if the country you’re resident in, has a double taxation agreement with France or UK for example.
Each convention is unique, rules may vary depending on the country.
Taxes are not fixed and will be calculated on the value of the assets including both assets in France and in the foreign country.
For example: Mr Little has estates that are worth €200,000. Its distribution is as follows:
- €50,000 estates in Argentina
- €150,000 estates in France
If heirs pay taxes in France and live in France, the tax rate will be based on €150,000 with accorded taxes applicable to €200,000.
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and to care
PacisLexis Family Law
You want to learn more about international inheritance?
For international inheritance matters, our experienced legal team is here to provide expert guidance.
Contact our law firm today to schedule a consultation and ensure a smooth and informed resolution to your cross-border inheritance concerns.
Your peace of mind is our priority.
PacisLexis Family Law
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