The rules of inheritance of a French Property
The issue is to determine the surviving spouse’s right over the French Property. I have chosen to analyse (a) the French regime which applies the principle of lex rei sitae, followed (b) by the legal certainty you may find in choosing, under the Regulation, the applicable law of succession, and (c) the current tax law regime and, finally.
French succession law
As of today, under French law, the law applicable to the succession of a real estate property is the law of where the property is located; therefore the rules the succession of the Property would be governed by French law.
Under French law, the surviving spouse as well as any children are considered as heirs and are therefore automatically entitled to the “réserve héréditaire” (legal reserve or reserved portion).
The choice of law under the Regulation as from 17 August 2015
The applicable law may change further to the enforcement of the Regulation as of 17 August 2015, i.e. applicable to the succession of persons who die on or after this date.
The scope of the Regulation only includes civil law aspects of succession to the estate of a deceased person and excludes many other aspects of law e.g. taxes.
The Regulation provides, under article 21 §1 that “the applicable law to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death”, regardless of his nationality.
Furthermore, Article 21 §2 of the Regulation provides “Where, by way of exception, it is clear from all the circumstances of the case that, at the time of death, the deceased was manifestly more closely connected with a State other than the State whose law would be applicable under paragraph 1, the law applicable to the succession shall be the law of that other State.”
Under article 22 of the Regulation, it is possible to choose, as the law to govern the succession, the law of the country whose nationality one possesses at the time of making the choice or at the time of death.
Furthermore, Article 10 of the Regulation provides that where the habitual residence of the deceased at the time of death is not located in a Member State of the EU, then the Courts in which are located the assets of the estate, shall have jurisdiction to rule on those assets.
Consequently, it may be interesting to insert in your will the designated law, should you want to prevent any confusion on the applicable law for the sucession of your French property.
The Applicable Tax law to the transmission of your property
As stated above, the applicable tax law is Lex rei sitae, the law where the property is situated. This principle will not be changed by the enforcement of the Regulation.
Article 796-0 bis of the French Tax Code states that the surviving spouse is exempted of mutation tax, meaning that the surviving spouse will not have to pay any taxes for the change of name of the property he inherits.
With regard to the current French tax law, your spouse will not have to pay any tax on the inheritance of the Property.