I SUCCESSIONS UNDER FRENCH DOMESTIC LAW

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1 1 Preamble With around 12.3 million Europeans living in a European Union country other than their own, approximately international successions are registered each year in France. There are two distinct categories of succession : - succession aux biens (property succession), - succession à la personne (personal succession). In the case of property succession: the heir only receives the estate after a phase of estate administration carried out by a third party. This is the system under American law. In the case of personal succession: the heir immediately and automatically acquires seisin of the estate. This is the system applied under French law. The expression used is : le mort saisi le vif (the deceased hands over to the living). Thus the heir who has received the property comprising the estate is responsible for administering it and liquidating it to settle the debts under the succession. Outline I SUCCESSIONS UNDER FRENCH DOMESTIC LAW Section I THE RULES A - SEISIN 1 - Seisin by an heir ab intestat (the party inheriting by virtue of the relevant laws) 2 - Seisin by a universal legatee 3 - Seisin by a legatee under universal title 4 - A legatee by particular title 5 - The testamentary executor 6 - The role of the notary B - LIABILITY FOR THE DEBTS UNDER THE SUCCESSION 1 - Basic principle 2 - The exception 3 - The options a - Full acceptance of the succession b - Acceptance of net assets c - Renunciation of succession Section II IN PRACTICE : SETTLEMENT OF A SUCCESSION (simple succession) 1 - Stage 1 : Deposition of the will in the records of the notary

2 2 2 - Stage 2 : Notarial affidavit 3 - Stage 3 : Deed formally noting delivery of legacy drawn up by the notary or order to transfer possession issued by the Judge. 4 - Stage 4 : Deposition of the tax statement for inheritance and payment of inheritance tax 5 - Stage 5 : Drafting of certificate of ownership for items of real estate II INTERNATIONAL SUCCESSIONS Section I SUCCESSION PROCEEDINGS OPENED BEFORE THE 17TH AUGUST 2015 A - Form of the will, application of the Hague Convention of the 5th October 1961 B - Law applicable to succession 1 - Application of the rule on division 2 - Application of the rule on renvoi (referral) Section II SUCCESSION PROCEEDINGS OPENED SINCE THE 17TH AUGUST 2015 A - Law applicable to the form of wills (article 27 of the European Regulation) B - Law applicable to succession : one law for the succession process as a whole 1 - Basic principle : the succession process as a whole is governed by the law of the place of habitual residence of the deceased at the time of his or her death (article 21 paragraph 1 of the European Regulation) 2 - Exclusion clause : the succession process is governed by the law of the State to which the deceased clearly had the closest ties (article 21 paragraph 2) 3 - The possibility of choosing the law applicable to one s succession (article 22) 4 - Referral (article 34 of the regulation). 5 - Scope of the applicable law I SUCCESSIONS UNDER FRENCH DOMESTIC LAW Section I THE RULES A/ SEISIN 1 - Seisin by an heir ab intestat (intestate)

3 3 In the majority of cases, the heir immediately acquires seisin of the property comprising the estate. Articles 720 to CIVIL CODE Art. 720 Successions are opened by death, at the last domicile of the deceased. Art. 721 Successions devolve according to legislation when the deceased did not dispose of his assets by means of liberalities. They may devolve by means of liberalities to the extent consistent with the reserved portion. Art. 722 Agreements having the purpose of creating rights or renouncing rights to all or part of a succession not yet opened or of an asset forming a part of it are effective only in the cases in which they are authorized by legislation. Art. 723 Abrogated Art. 724 Heirs designated by legislation have seizin by operation of law of the assets, rights, and actions of the deceased. Universal legatees and universal donees have seizin under the conditions provided for in Title II of this Book. If none exists, the succession is acquired by the State, which must cause itself to be sent into possession. Article The provisions of this Title, in particular those which relate to option, indivision, and partition, apply as may be thought proper, to universal legatees or universal donees, or legatees or donees by universal title, unless otherwise provided by a specific rule. 2 - Seisin by a universal legatee

4 4 - With an heir to a reserved portion : the universal legatee does not acquire seisin and must apply to the heir to a reserved portion (either a child of the deceased or - in the absence of a child - the spouse) for delivery of his or her legacy. - If there is no heir to a reserved portion and the universal legatee owes his or her legacy to an authenticated will (a will received by a notary in the presence of two witnesses or a will received by two notaries), the universal legatee acquires seisin and may therefore take possession of the property and administer the succession. - If there is no heir to a reserved portion and the universal legatee owes his or her legacy to a holographic will (a widely-used form of will in France, being written, dated and signed by the testator without witnesses), the universal legatee has to obtain an order from the Presiding Judge at the Tribunal of Grande Instance (Regional Court) covering the place of domicile of the deceased in order to take possession of the property. Articles Civil Code Article 1003 A universal legacy is a testamentary disposition by which a testator donates to one or more persons the universality of the assets which he leaves at his death. Article 1004 When at the death of a testator there are heirs to whom a portion of his assets is reserved by legislation, those heirs are seized as a matter of law, by the death, of all the assets in the succession; and a universal legatee must demand from them the delivery of the assets included in the testament. Article 1005 Nevertheless, in the same cases, a universal legatee has the enjoyment of the property covered by the testament from the day of the death, if a demand for delivery was made within one year after that time; otherwise, that enjoyment commences only from the day of judicial demand, or from the day when delivery was voluntarily consented to. Article 1006 When at the death of a testator there are no heirs to whom a portion of his asset is reserved by law, a universal legatee is seized as a matter of law by the death of the testator, without being bound to demand delivery. Article 1007 Every olographic or mystic testament, before it is put into execution, shall be deposited in the hands of a notary. The testament shall be opened if it is sealed. The notary shall draw up at once a formal

5 5 memorandum of the opening and of the condition of the testament, while specifying the circumstances of the deposit. The testament and the formal memorandum shall take their place in order among the original acts of the notary. Within the month following the date of the formal memorandum, the notary shall address an official copy of it and a facsimile of the testament to the clerk of the tribunal d'instance of the place where the succession was opened, who shall acknowledge receipt of those documents and shall place them in order among his original acts. Article 1008 In the case governed by Article 1006, if the testament is olographic or mystic, a universal legatee is bound to cause himself to be sent into possession, by an order of the president, written at the foot of a petition, to which the act of deposit shall be joined. Article 1009 A universal legatee, who competes with an heir to whom legislation reserves a portion of the assets, is liable for the debts and charges of the succession of the testator, personally to the extent of his share and portion, and as a hypothecary to the extent of the whole; and he is responsible for paying all the legacies, except in case of reduction, as explained in Articles 926 and Seisin by a legatee under universal title A legatee under universal title is entitled to a portion or proportion of the property (for example : 1/3 of the property or all the movables or 1/2 of the movables or 1/4 of the immovables). He or she has always to apply to the heir to a reserved portion, or failing that to the universal legatee, or failing that to the heirs to the succession (for example, in the absence of a child or spouse, the father, mother, brother and sister of the deceased), for delivery of the property. Articles 1010 to 1013 Civil Code Article 1010 A legacy under universal title is one by which the testator bequeaths a portion of the assets of which legislation permits him to dispose, such as one-half, one-third, or all his immovables, or all his movables, or a fixed portion of all his immovables or of all his movables. Any other legacy constitutes only a disposition under particular title. Article 1011 Legatees under universal title must demand delivery from the heirs to whom a portion of the assets is

6 6 reserved by law; if there are none, from the universal legatees and, if there are none, from the heirs called to the succession in the order established by the Title Successions. Article 1012 A legatee under universal title is bound, as is a universal legatee, for the debts and charges of the succession of the testator, personally to the extent of his share and portion, and as a hypothecary to the extent of the whole. Article 1013 If a testator has disposed of only a part of the disposable portion, and has done so under universal title, that legatee is responsible for paying the particular legacies by contribution with the natural heirs. 4 - A legatee by particular title The legatee by particular title is the recipient of a particular and specific item of property. He or she has always to apply for delivery of the item in order to take possession of it. 5 - The testamentary executor The appointment of a testamentary executor is not standard practice - while not rare it is not particularly frequent. His or her powers : - The testamentary executor may apply interim conservatory measures and may, in the absence of sufficient liquidity, sell the movables to pay off urgent debts ; - If provided for in the will, he or she may take possession of the movables and sell them in order to settle particular legacies ; - And in the absence of an heir to a reserved portion, he or she may - if authorized to do so by the testator - sell all or part of the immovables, invest capital, pay debts, and divide the property among heirs and legatees. Seisin : If the testamentary executor has received authorization in the authenticated will, seisin takes place immediately. Failing this, he or she may only carry out the relevant duties after being formally granted possession in an order from the Presiding Judge at the Regional Court. Articles 1025 to 1034 Civil Code

7 7 Art A testator may appoint one or more testamentary executors, enjoying full civil capacity to supervise or to proceed to the execution of his wishes. The testamentary executor who accepts his mission is bound to accomplish it. The powers of the testamentary executor are not transmissible mortis causa. Article 1026 The tribunal may relieve the testamentary executor of his mission for serious reasons. Article 1027 If there are several testamentary executors who accept appointment, one of them may act without the others, unless the testator provided otherwise or divided their functions. Article 1028 The testamentary executor is implicated in any judicial proceedings if the validity or the execution of the testament or of a legacy is contested. In all cases, he intervenes to maintain the validity or to require the execution of the provisions contested in the litigation. Article 1029 The testamentary executor takes conservatory measures useful to the proper execution of the testament. He may proceed, in the forms provided for in Article 789, to an inventory of the succession in the presence or absence of the heirs, after giving them due notice. He may cause the sale of movables if there are not enough liquid assets to pay the urgent debts of the succession. Article 1030 The testator may enable the testamentary executor to take possession of all or part of the movables of the succession and sell them if it is necessary to pay particular legacies within the limits of the disposable portion. Article If there is no reserved heir who accepts, the testator may enable the testamentary executor to dispose of all or part of the immovables of the succession, to receive and to place the capital to pay the debts

8 8 and charges, and to proceed to the allocation or partition of the remaining assets among the heirs and legatees. On pain of its being unopposable to them, the sale of an immovable of the succession may take place only after the heirs have been informed of it. Article When the testament has been put in authentic form, sending into possession as provided for in Article 1008 is unnecessary for the execution of the powers mentioned in Article 1030 and Article 1031 The powers mentioned in Articles 1030 and are given by the testator for a duration that cannot exceed two years, counting from the opening of the testament. An extension for an additional year at most may be granted by the judge. Article 1032 The mission of the testamentary executor ends at the latest two years after the opening of the testament, unless extended by the judge. Article 1033 The testamentary executor renders an account within six months following the end of his mission. If the execution of the testament ends by the death of the executor, the obligation to render an account binds his heirs. He assumes the responsibility of a mandatary under gratuitous title. Article The mission of the testamentary executor is gratuitous, except for a liberality made under particular title, with regard to the means of the disposing party and the services rendered. Article 1034 Expenses incurred by a testamentary executor in the exercise of his mission are charged to the succession. 6 - The role of the notary The notary acts on behalf of the heirs to settle the succession. He or she is selected by the heirs or universal legatees. If several notaries are appointed to settle one succession, the relevant ethical rules will be applied in order to designate one of them to draw up the deeds, with the other notaries advising their respective clients.

9 9 The notary has legal authority to draw up the notarial affidavit designating the heirs. He or she receives funds and settles the debts under the succession with the agreement of the heirs designated ; he or she draws up certificates and statements of ownership to record the devolution of property to the heirs or legatees. In certain cases (notably disputed successions), a notary may be appointed by the Judge to settle a succession. In such an event, said notary will report to the Judge that designated him or her. B - OBLIGATION TO SETTLE THE DEBTS UNDER THE SUCCESSION 1 - Basic principle In France, the heir, having automatically acquired seisin, is legally responsible for paying the debts under the succession. Unless the heir implements specific measures (see below), the heir s own assets are automatically assimilated with those of the deceased. The heir is then required to pay the debts under the succession and this obligation is indefinite in extent. Thus he or she is required to settle the debts even in excess of the value of the assets he or she receives, having an ultra vires obligation. This ultra vires obligation to settle debts is applicable to the heir and to universal legatees or legatees under universal title. Article 785 Civil Code Art. 785 The universal heir or the heir under universal title who accepts the succession purely and simply answers indefinitely for the debts and encumbrances that form part of the succession. He is only liable for legacies of money to the extent of the assets of the succession net of the debts. 2 - The exception In order to escape this ultra vires obligation, the heir (or the universal legatee or legatee under universal title) must declare to the Court that he or she only intends to accept the succession up to the value of the net assets. Thus this obligation to settle debts up to the value of the assets is not automatic! In such an event, the heir (or the universal legatee or legatee under universal title) must carry out a certain number of formalities, failing which this security will no longer be available. AS A CONSEQUENCE, the extent of the obligation to settle debts depends upon the form of acceptance of the succession that was chosen by the heir.

10 The options For a succession, the heir (or the universal legatee or legatee under universal title) can choose between 3 solutions. This is referred to as the option successorale (succession choice). [In the following paragraphs of this section 3 and the section 4 the word heir includes universal legatee or legatee under universal title] He or she may : - Fully accept the succession - Accept the succession up to the value of the net assets - Renounce the succession. As indicated above, each option has different consequences as regards settlement of the debts of the deceased. Time limit for exercising options As from the opening of the succession (i.e. from the date of death), the heir has 4 months in which to make the succession choice. During this period, he or she may not be compelled to make a choice. Once this 4-month period is over however, unless a decision has been taken, the following individuals will be entitled to compel the heir to choose (by sending him or her formal notice by extrajudicial deed) : - a party with a claim against the succession - a Co-heir - a subsequent-ranking Heir (who would inherit if the heir renounces) - the State. If compelled to choose between options, the heir then has 2 months in which to take a decision or apply to the judge for an extension of this period. If he or she fails to select an option despite receiving formal notice requiring this, the heir will be considered to have fully accepted the succession. Maximum time allowed If the heir is not compelled to choose between options, he or she then has a maximum of 10 years in which to take a decision. If he or she fails to do so within this period, he or she will be deemed to have renounced the succession. A - Full acceptance of the succession

11 11 Full acceptance of the succession may be express or implied. Acceptance is implied when the potential successor having the seisin acts in a way that inevitably implies an intention to accept and that would only have been open to him or her as an heir accepting the succession (e.g. : selling an item of property). However purely conservatory measures and administrative activities do not automatically imply full acceptance (e.g. : paying insurance on the house). Article 784 Civil Code Art.784 Acts that are purely conservatory or supervisory and acts of provisional administration may be accomplished without implying acceptance of the succession, if the person who is called to the succession has not assumed the title or status of heir. Any other act that the interest of the succession demands and that the person who is called to the succession wishes to accomplish without assuming the title or status of heir must be authorized by the judge. Acts deemed purely conservatory include the following: 1 The payment of expenses of the funeral and of the last illness, of taxes owed by the deceased, rents and other succession debts whose settlement is urgent; 2 The recovery of fruits and revenues of succession assets or the sale of perishable goods, subject to the obligation to demonstrate that the funds were used to extinguish debts under 1 or were deposited with a notary or with the court; 3 An act whose purpose is to prevent an increase of the succession debts. 4. The acts related to the termination of the employment contract of an employee of the deceased individual employer, payment of wages and allowances payable to the employee as well as the delivery of end of contract documents. Current transactions necessary to the short-term continuation of the activities of an enterprise that forms part of the succession are reputed to be provisional acts of administration. Other acts that are not reputed to imply a tacit acceptance of the succession are the renewal, as lessor or lessee, of a lease that would, in the absence of renewal, give rise to the payment of an indemnity, as well as carrying out decisions of administration or of disposition made by the deceased and necessary to the proper functioning of the enterprise. Full acceptance has the following consequences : - the heir can no longer renounce the succession, nor accept it up to the value of the net assets ; - the heir receives his or her share of the inheritance and is required to pay all the debts of the deceased with no limitations.

12 12 There are however 2 limits to the obligation to settle debts : - The heir is only required to settle debts in proportion to his or her entitlements to the inheritance. For example, if he or she is entitled to one quarter of the inheritance, he or she will only be required to pay one quarter of the debts of the deceased. - If within 5 months he or she discovers a large debt, a legal application may be made for him or her to be released from all or part of this debt if both the following conditions are met : * the heir had legitimate reasons to be unaware of the existence of this debt when accepting the succession ; * payment of this debt would be liable to seriously diminish his or her own estate. b - Acceptance of net assets In practice, and in the majority of cases, the heir, being aware of the assets comprising the estate of the deceased, fully accepts the succession and so commits to paying all the debts. It is only if the heir fears that the liabilities are equivalent in size to the assets, or if he or she knows nothing about the estate left by the deceased, that the heir will make a declaration of acceptance of net assets. If the heir believes the succession to be in deficit, he or she will opt to renounce it and will not be required to administer the estate. The consequences of an acceptance of net assets are as follows : - The heir receives his or her share of the inheritance without having to pay any debts that exceed the value of said inheritance. Thus the heir s personal assets are protected from creditors of the deceased. - The heir can no longer renounce the succession. - If the heir discovers that the succession is in surplus, he or she may then fully accept the succession. If the heir accepts the succession up to the value of the net assets, he or she must carry out the following formalities : - make a declaration at the office of the chief clerk of the Regional Court covering the place of domicile of the deceased indicating that he or she accepts the succession up to the value of the net assets (this declaration being made in person or in the majority of cases through a representative) ; the declaration must also contain an election of domicile (in general at the offices of the notary appointed to settle the succession) ; - have a notice published in a legal announcement gazette ; - carry out a detailed and priced inventory of the assets and liabilities comprising the succession ; - deposit this inventory at the court within two months of the declaration and publish details of this deposition in a legal announcement gazette (thus bringing it to the attention of creditors) ; - administer the property comprising the succession and monitor its administration ; - if he or she sells an item of property from the succession, the heir is indebted for the amount of the sale price. He or she must present a declaration of the sale to the same court within 15 days. The court will then publish details of the sale. If the sale was carried out privately, any creditor may challenge the sale price before the judge within three months of this publication by proving that the value of the

13 13 item was greater. If the challenge is accepted by the judge, the heir must make good the shortfall from his or her personal assets ; - creditors must present their claims at the domicile elected by the heir. If no notification is received of a creditor s claim within 15 months of publication of the declaration of acceptance of net assets and said claim is not secured by a charge on the assets within the succession, it will be extinguished ; - the heir settles the debts under the succession as follows : * he or she settles the claims secured by charges on the assets within the succession based upon the ranking of the charges ; * he or she settles the claims that are not secured by charges, in the order in which they were declared ; * legacies in the form of cash are delivered after settlement of debts. In theory, the heir pays the creditors within two months of the date on which the proceeds from sale of the item of property are available. However, in the event of a dispute regarding the nature or the order of claims, he or she shall formally deposit the amounts concerned for as long as the dispute continues. - the heir will present details of the administrative account to any creditor who requests this ; - any heir who knowingly and in bad faith omits from the inventory an asset or liability, or who fails to allocate the proceeds from sale of an asset to pay the creditors, will be disqualified from accepting net assets, and will as a consequence be deemed to have fully accepted the succession as from its opening, with an obligation to settle all its debts. c - Renunciation of succession If the potential successor renounces the succession, he or she will be deemed never to have been an heir : while receiving no assets, he or she will not be required to settle the debts of the deceased. However the ascendants or descendants of the deceased may be called upon to contribute to funeral expenses according to their means. Until such time as the other heirs have accepted the succession, a potential successor who has renounced it may reverse his or her decision at any point over the next 10 years, opting for full acceptance of the succession. He or she must make a declaration of renunciation at the office of the chief clerk of the Regional Court covering the place of domicile of the deceased. Section II IN PRACTICE : SETTLEMENT OF A SUCCESSION (simple succession) 1 - Stage 1 : Deposition of the will in the records of the notary The notary deposits the original of the will holographic will in his or her records. The notary sends an authenticated copy of this will to the Court.

14 14 Article 1007 Civil Code Art Every olographic or mystic testament, before it is put into execution, shall be deposited in the hands of a notary. The testament shall be opened if it is sealed. The notary shall draw up at once a formal memorandum of the opening and of the condition of the testament, while specifying the circumstances of the deposit. The testament and the formal memorandum shall take their place in order among the original acts of the notary. Within the month following the date of the formal memorandum, the notary shall address an official copy of it and a facsimile of the testament to the clerk of the tribunal d'instance of the place where the succession was opened, who shall acknowledge receipt of those documents and shall place them in order among his original acts. 2 - Stage 2 : Notarial affidavit This document : - designates the heirs, - indicates the existence or otherwise of heirs to reserved portions, - declares whether or not there is a will, and - if there is - whether a testamentary executor has been appointed, - indicates the proportion allocated to each party. This deed is authoritative, serving to demonstrate whether a given individual is one of the deceased s heirs or legatees. A copy of this document will then be sent to the organizations holding the funds, such as banks. In order to produce this deed, the notary collects the identity documents and the birth and marriage certificates of the deceased and of his or her heirs and legatees, as well as their marriage contracts. This deed contains the following details of the deceased and of his or her heirs : Forenames, surname, nationality, place of domicile, date and place of birth, date and place of marriage, system of marital property. Article Civil Code Art Proof of heirship may result from an act of notoriety drawn by a notary upon demand of one or several interested parties. The act of notoriety must refer to the certificate of death of the person whose succession is opened and shall mention the supporting documents that may have been produced, such as acts of civil status and,

15 15 if appropriate, documents relating to the existence of liberalities mortis causa that may affect the devolution of the succession. It shall contain the assertion, signed by one or more of the interested parties making the demand, that they are called, alone or with others whom they specify, to receive all or part of the succession of the deceased. Any person whose statements seem to be useful may be called to the act. Mention of the existence of the act of notoriety shall be made in the margin of the certificate of death. 3 - Stage 3 : Deed formally noting delivery of legacy drawn up by the notary, or order to transfer possession issued by the Judge. - If there are one or more heirs to a reserved portion, the notary formally notes in a deed that the heirs to a reserved portion agree to deliver the legacy to the legatee (whatever the form of the will) ; - If there is no heir to a reserved portion : * the universal legatee deriving rights from a holographic will must obtain an order to transfer possession in order to acquire possession of the property ; * and if the deceased has given this authorization to the testamentary executor, said executor may deliver the legacy or legacies. If however the executor has been authorized under the terms of a holographic will, he or she must also obtain an order to transfer possession. In order to obtain the order to transfer possession, the notary appoints a lawyer to submit an application to the judge at the Regional Court covering the place of domicile of the deceased. 4 - Stage 4 : Deposition of the tax statement for inheritance and payment of inheritance tax Time allowed : Six months as from a death occurring in France and one year as from a death occurring outside France. Parties responsible for payment of inheritance tax : heirs, legatees. However the testamentary executor is never responsible for the payment of inheritance tax. Joint and several liability for payment of the tax : there is joint and several liability among the heirs. There is no joint and several liability among the legatees, nor between a legatee and an heir. The tax is directly calculated on the share received by each heir or legatee at a progressive or fixed rate that depends on the nature of their relationship to the deceased. 5 - Stage 5 : Drafting of certificate of ownership for items of real estate The notary draws up the certificate of ownership that constitutes the heir s documentary title. This deed references the death, indicates the identity of the heirs, stipulates that they have accepted the succession, and declares that delivery of legacy, or transfer of possession, has taken place. And the notary, having inspected and taken account of all these elements, certifies that the item of real estate

16 16 belongs to a particular heir or legatee (or to a number of heirs, in the case of undivided ownership). This deed is then published in the register of real estate. II INTERNATIONAL SUCCESSIONS Section I SUCCESSION PROCEEDINGS OPENED BEFORE THE 17TH AUGUST 2015 A - Form of the will, application of the Hague Convention of the 5th October 1961 The will is valid if it complies with domestic law applicable in the place of disposition of assets, in the State from which the nationality originated - or in which the place of domicile or residence of the deceased was located - when he or she disposed of said assets or when he or she died. In the case of dispositions relating to an item of real estate, the will is valid if the form complies with the law applicable in the location of said real estate. B - Law applicable to succession Source : In the area of succession, numerous rules arise from the relevant case law. 1 - Application of the rule on division - The succession of movables is governed by the law applicable in the final place of domicile of the deceased. - The succession of immovables is governed by the law applicable in the location of each item of real estate. 2 - Application of the rule on renvoi (referral) If the international law applicable in the State of in which the final place of domicile of the deceased (in the case of movables) or in the State in which the property is located (in the case of immovables) applies another law, we accept this referral. For example : Mr. Martin, a French national, dies with his place of domicile in Spain. He owned an apartment in Paris and an art collection. The apartment, as an item of real estate, is devolved in accordance with French law, this being the law of the State in which the property is located. The artworks, as movables, are devolved in accordance with the law applicable where the place of domicile was located. Prior to the 17 th August 2015, Spanish international law stipulated that the succession was governed by the law of the State of which the deceased was a national. As a consequence, we would apply French law - this being the law of the State of which the deceased was a national - to the movables, by the process of referral from Spanish law to French law.

17 17 Section I SUCCESSION PROCEEDINGS OPENED SINCE THE 17TH AUGUST 2015 The issue of succession is now governed by (EU) Regulation n passed by the European Parliament and Council on the 4 th July 2012 and relating to jurisdiction, applicable law, the recognition and execution of decisions (whether judicial or voluntary), and the acceptance and execution of authenticated deeds, as well as the creation of a certificate of succession. This regulation is applicable in all European Union States except Denmark and the United Kingdom, from the 17 th August The EU Regulation excludes from its scope of taxation. A - Law applicable to the form of wills (article 27 of the European Regulation) The regulation reiterated the provisions of the Hague Convention on the law applicable to the form of wills. Article 27 Formal validity of dispositions of property upon death made in writing 1. A disposition of property upon death made in writing shall be valid as regards form if its form complies with the law: (a) of the State in which the disposition was made or the agreement as to succession concluded; (b) of a State whose nationality the testator or at least one of the persons whose succession is concerned by an agreement as to succession possessed, either at the time when the disposition was made or the agreement concluded, or at the time of death; (c) of a State in which the testator or at least one of the persons whose succession is concerned by an agreement as to succession had his domicile, either at the time when the disposition was made or the agreement concluded, or at the time of death; (d) of the State in which the testator or at least one of the persons whose succession is concerned by an agreement as to succession had his habitual residence, either at the time when the disposition was made or the agreement concluded, or at the time of death; or (e) in so far as immovable property is concerned, of the State in which that property is located. The determination of the question whether or not the testator or any person whose succession is concerned by the agreement as to succession had his domicile in a particular State shall be governed by the law of that State.

18 18 2. Paragraph 1 shall also apply to dispositions of property upon death modifying or revoking an earlier disposition. The modification or revocation shall also be valid as regards form if it complies with any one of the laws according to the terms of which, under paragraph 1, the disposition of property upon death which has been modified or revoked was valid. 3. For the purposes of this Article, any provision of law which limits the permitted forms of dispositions of property upon death by reference to the age, nationality or other personal conditions of the testator or of the persons whose succession is concerned by an agreement as to succession shall be deemed to pertain to matters of form. The same rule shall apply to the qualifications to be possessed by any witnesses required for the validity of a disposition of property upon death. B - Law applicable to succession 1 - Basic principle : the succession process is governed by one law, the law of the place of habitual residence of the deceased at the time of his or her death (article 21 paragraph 1 of the European Regulation) The place of habitual residence is established by assessing the full set of circumstances of the life of the deceased in the years leading up to his or her death and at the time of his or her death. Account must be taken of all the relevant of facto elements such as the duration and regularity of the presence of the deceased in a State, and the conditions and reasons for his or her presence. A close and stable tie is required to the State concerned. 2 - Exclusion clause : the law of the State to which the deceased clearly had the closest ties (article 21 paragraph 2) If, on an exceptional basis, assessment of the full set of circumstances indicates that at the time of his or her death, the deceased clearly had closer ties with a State other than that in which he or she had his place of habitual residence, the law applicable to succession shall be that of said other State. Article 21 General rule 1. Unless otherwise provided for in this Regulation, the law applicable 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. 2. 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.

19 19 3- The possibility of choosing the law applicable to one s succession (article 22) An individual may in his or her will choose as the law governing his or her succession as a whole the law of the State whose nationality he or she possesses at the time of making the choice or at the time of death. Article 22 Choice of law 1. A person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death. A person possessing multiple nationalities may choose the law of any of the States whose nationality he possesses at the time of making the choice or at the time of death. 2. The choice shall be made expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition. 3. The substantive validity of the act whereby the choice of law was made shall be governed by the chosen law. 4. Any modification or revocation of the choice of law shall meet the requirements as to form for the modification or revocation of a disposition of property upon death. 4 - Referral (article 34 of the regulation). When the Regulation requires application of the law of a Third State (i.e. of a State that does not apply the Regulation), this entails the application of the rules laid down in the domestic law of this State as well as the rules laid down in this State s private international law, provided the latter rules refer to : - a) the law of a member State, or - b) the law of another Third State that applies its own law. For example : Mr. Robinson died on the 14 th September His place of habitual residence was New York (NY). He left an apartment and some artworks in Paris, a house and some artworks in London, and a castle and some artworks in Spain. - For the artworks in France, the reasoning is as follows : Law of place of residence à law of the State of New York à if application of the international law of the State of New York à law of the place of domicile of the deceased à law of New York. It is not another Third State. Thus the law of place of residence is applied and not the international law of New York. So the law of the State of New York (this being the law of the place of residence) is applied to these artworks.

20 20 - For the Paris apartment, the reasoning is as follows : Law of place of residence à Law of New York à Application of the international law of the State of New York à Law of the location of the real estate à French law The matter is referred to French law as it is the law of a member State. - For the London house : Law of place of residence à Law of New York à International law of New York à Law of location à English law. English law will be applied to devolution of the London house, as it is the law of another Third State that would apply its own law. - For the London artworks : Law of place of residence à Law of New York à Application of the international law of the State of New York à Law of the place of domicile of the deceased à Law of New York It is not another Third State. Thus the law of place of residence is applied and not the international law of New York. So the law of the State of New York (this being the law of the place of residence) is applied to these movables. - For the Spanish castle : Law of place of residence à Law of New York à Application of the international law of the State of New York à Law of location à Spanish law. The matter is referred to Spanish law as it is the law of a member State. - For the artworks in Spain : Law of place of residence à Law of New York à Application of the international law of the State of New York à Law of the place of domicile of the deceased à Law of New York It is not another Third State. Thus the law of place of residence is applied and not the international law of New York. So the law of the State of New York (this being the law of the place of residence) is applied to these movables. In summary : - Paris apartment : French law - London house : English law - Spanish castle : Spanish law - Artworks in France, in England and in Spain : New York Law. Conclusion : If the deceased had his place of domicile in a State that does not apply the European Regulation, the succession may be governed by several legal systems. Article 34 Renvoi 1. The application of the law of any third State specified by this Regulation will mean the application of the rules of law in force in that State, including its rules of private international law in so far as those rules make a renvoi:

21 21 (a) to the law of a Member State; or (b) to the law of another third State which would apply its own law. 2. No renvoi will apply with respect to the laws referred to in Article 21(2), Article 22, Article 27, point (b) of Article 28 and Article Scope of the applicable law The law applicable to succession governs the following aspects in particular (as a non exhaustive list) : - the causes, time and place of the opening of the succession, - the entitlement of the beneficiaries to inherit, and determination of their respective shares, - disinheritance and disqualification as successor, - the transfer of property, - liability for the debts under the succession, - the powers of the heirs and of the testamentary executors and other administrators of the estate, in particular as regards the sale of property and the payment of creditors, - the disposable part and reserved portion, and the other restrictions on the freedom to dispose of property, - reporting and setting aside gifts when determining the shares of the different beneficiaries, - sharing out of the estate. Article 23 The scope of the applicable law 1. The law determined pursuant to Article 21 or Article 22 shall govern the succession as a whole. 2. That law shall govern in particular: (a) the causes, time and place of the opening of the succession; (b) the determination of the beneficiaries, of their respective shares and of the obligations which may be imposed on them by the deceased, and the determination of other succession rights, including the succession rights of the surviving spouse or partner; (c) the capacity to inherit; (d) disinheritance and disqualification by conduct; (e) the transfer to the heirs and, as the case may be, to the legatees of the assets, rights and obligations forming part of the estate, including the conditions and effects of the acceptance or waiver of the succession or of a legacy; (f) the powers of the heirs, the executors of the wills and other administrators of the estate, in particular as regards the sale of property and the payment of creditors, without prejudice to the powers referred to in Article 29(2) and (3); (g) liability for the debts under the succession; (h) the disposable part of the estate, the reserved shares and other restrictions on the disposal of

22 22 property upon death as well as claims which persons close to the deceased may have against the estate or the heirs; (i) any obligation to restore or account for gifts, advancements or legacies when determining the shares of the different beneficiaries; and (j) the sharing-out of the estate. Caroline DENEUVILLE Notaire in PARIS 14 th September 2016