Germany and France have always restricted how assets can pass on death, requiring them to be left to specific family members. Following the introduction of the EU Succession Regulation in 2015, this is not a significant issue for British nationals with assets in those jurisdictions, as they can opt out of the restrictions by selecting English law as the governing law of their succession, the starting point under which is that one can leave assets as one pleases. New rules in France and case law precedent in Germany aim to impose restrictions, in certain circumstances, on this ability to choose a governing law to prevail.
Germany
In 2022, a German court case decided that a British national’s choice of English law was invalid, as it would be offensive to German public policy. The reasoning was that the deceased had a “close connection” to Germany. The term “close connection” was left undefined, so clients with any connection to this country should consider the court’s ruling carefully.
France
In 2021, France introduced a law providing a right of compensation where a Will elects for the succession to be governed by the law of a country that does not automatically provide children with the right to inherit a portion of the French estate. For practical purposes, this is most relevant to citizens of Great Britain, the US and common law countries where testamentary freedom is the norm.
The French law will only apply if the deceased or any child of the deceased lived in an EU country or was an EU national at the time of death. The child would need to actively claim the compensation, rather than it being automatically granted. French notaries must notify affected heirs where French law is not applied.
Lifetime Gifts
The laws in Germany and France both allow for certain lifetime gifts to be overturned based on their respective forced heirship rules. Broadly, Germany will target gifts within the previous ten years and France those within the previous fifteen years.
Solutions
We can assist by providing solutions to these inheritance hurdles, whether it be by undertaking planning under English law or, using our network of foreign advisers, under the law of Germany or France.