Today is: 30 July 2010
Conversation between David Anderson partner at Sykes Anderson LLP and a UK individual who is dealing with his late father's estate which includes a French holiday home.
Please note that this article deals with the legal aspects and not the tax aspects of French probate. We can advise separately on the tax position both in the UK and in France and particularly on the implications, if any, of the UK-France Inheritance tax Double Tax Treaty. We generally only accept instructions to deal with French estates if we are also instructed on the corresponding UK estate.
Q. There is constant anecdotal evidence that probates in France, especially those with UK angles, take years to deal with. Is this your experience?
A. Sadly yes. There is a real problem if a UK domiciled person's estate includes assets in France. Obtaining the release of money held in a French bank account or permission to sell French land can hold up the settlement of the UK estate, as the executors cannot ascertain the full value of the estate which is required to obtain a Grant of Probate. Neither can they deal with collecting in the assets and paying out to the beneficiaries which means that the administration cannot be completed.
Q. Why is this such a problem?
A. At a very practical level a French notaire must be instructed to prepare a document called an Acte de notoriété which is usually essential before the estate can be administered. There are no executors as such who deal with the administration so this cannot be done without the use of a notaire. Unlike in the UK, French notaires' fees are fixed by law and the fees for taking an inventory which leads to the Acte de notoriété are fixed by law at €300 regardless of the size of estate or its complexity. The French expect this service at low cost and it is in practice subsidised by the notaires' high fixed fees for conveyancing. This means that notaires are not keen to deal with probates (especially complex ones or where there is a foreign aspect) but have to do it as part of their public service. Our view is that this cross-subsidy has only a short term future in France but for the moment this is how it works there .
Q. If there are complexities because the deceased was UK resident or domiciled can the notaire charge more?
A. Normally not. They are still required to deal with any person who turns up at their offices on a cab rank principle but there will be little enthusiasm for getting involved in a complex probate with non-French angles and the work will probably be given low priority when high fees from straightforward conveyancing are on offer. In practice the enthusiasm will be even lower if the heirs are not planning to sell the property after the death because there is no chance of a conveyancing or agency fee. It is a bit like asking a London taxi driver on a rainy Saturday night to choose between a fare to Knightsbridge and a fare to "South of the river"!
Q. Is it worth paying more to get an expert notaire in France to deal with the French estate?
A. In our view this is the way to get things done faster. Notaires who specialise in international estates and who are au fait with the complexities these raise are thin on the ground and are in demand. They will charge more under a procedure known as "Article 4" which allows extra fees if there are particular complexities provided the fees position has been fully explained to the clients. If you agree to pay more in France you will get a better and faster service.
Q. Apart from the fees issue what happens to a person's French estate on death?
A. The first factor is to ascertain whether they are married and if so if there was a marriage contract in place. If property is held within the marriage community then this property will normally pass to the surviving spouse. There are complications if children from previous relationships are involved. Also, property owned en tontine will pass to the survivor(s). There are important tax implications here which are outside the scope of this article but which we can advise on.
Q. What happens to the rest of the French estate?
A. Some of it passes automatically to the statutory heirs under the French forced heirship rules. There is a portion which can be disposed of by will and so a search will be made to see whether the deceased person made a French will to deal with the French assets. Checks should be made with the notaire who dealt with the purchase of any property and a search should be made of the French national wills database.
Q. So as my father was UK domiciled and resident when he died and only had a holiday home in France there, the French rules only apply to the land?
A. Yes. As he was UK domiciled, English law will apply to all other assets including, say, bank accounts, cars and furniture in France.
Q. Why do many people in France not have wills?
A. The forced heirship rules apply to the majority of the estate. Most people take the view that they would like the small share which can be disposed of by will to pass to their immediate family anyway, under the French intestacy rules, and so do not make a Will.
Q. What happens if my father had lived some time in France but had kept a flat in the UK?
A. If he has been living in France as a French resident, he is likely to have acquired a French domicile. The French rules will cover everything apart from the UK flat. In other words any shares, bank accounts and furniture in the UK will pass under French law due to the French domicile. English law will cover the flat only. In practice if there is a joint bank account in the UK, the bank will usually pay out to the other account holder on production of a death certificate though strictly this is incorrect.