{"id":9204,"date":"2018-11-02T14:00:37","date_gmt":"2018-11-02T18:00:37","guid":{"rendered":"https:\/\/moniquecharlebois.ca\/?p=9204"},"modified":"2023-04-12T08:44:29","modified_gmt":"2023-04-12T12:44:29","slug":"ontario-testators-with-assets-in-france-which-law-will-apply","status":"publish","type":"post","link":"https:\/\/moniquecharlebois.ca\/fr\/2018\/11\/02\/ontario-testators-with-assets-in-france-which-law-will-apply\/","title":{"rendered":"Ontario Testators with Assets in France: Which Law Will Apply?"},"content":{"rendered":"<p><em>(Edited translation of article written by Margot Pitou, Master DRHPS (Univ. de Versailles, France), Research Assistant to Monique J. Charlebois. The original article is posted in the French language blog section of this website.)<\/em><\/p>\n<p>There are several complications affecting the disposition of property which is situated in France but owned by Ontario residents.&nbsp; First, which law would apply to that property or assets? Is it possible to choose the law that you want to apply? And which jurisdiction\u2019s taxes must be considered?<\/p>\n<p><strong>1) &nbsp;The applicable law<\/strong><\/p>\n<p>Recently, the European Union (EU) attempted to harmonize the complex multi-jurisdictional laws in estates matters (\u2018successions\u2019).&nbsp;Regulation (EU) No. 650\/2012 came into force on August 17<sup>th<\/sup>, 2015 and will apply to estates where the date of death occurs after that date, in all member states (including France) except for Denmark, the UK and Ireland.&nbsp; (For older estates, the rules of private international law will continue to apply.)<\/p>\n<p>The Regulation provides that the estate will be governed by the law of the country where the deceased was habitually resident.&nbsp;Accordingly, the estate of an Ontario resident who owns real estate in France would be governed by Ontario law. Simple? Not so fast\u2026.<\/p>\n<p>Under Ontario law, real estate is governed by the law of the jurisdiction where it is situated.<a name=\"_ftnref1\"><\/a>[1]&nbsp; In private international law terms, this is called a \u2018renvoi\u2019.&nbsp; Thus the law of France would apply to the property in France. &nbsp;This could complicate matters and the testator\u2019s wishes may not applied or respected if they are contrary to the laws of France.&nbsp; In particular, France does not allow a testator to completely disinherit his or her children; there is a system of \u2018forced heirship\u2019.&nbsp; At a minimum, a testator who wants to leave the entirety of her assets in France to her spouse and none to her children, ought to expressly select Ontario as the applicable law for her estate.<\/p>\n<p><strong>2) &nbsp;Choice of Law<\/strong><\/p>\n<p>With the 2015 EU Regulation in place, a Canadian national who is normally resident in Canada and has property in France may select Canadian law (more precisely, the law of the province in which he or she is habitually resident) as governing the entirety of his or her estate.&nbsp;&nbsp; This choice of applicable law must be made expressly and clearly in the testator\u2019s Will.&nbsp; Note that it is not possible to expressly choose or to direct the split up the estate such that the law of one jurisdiction applies only to certain assets; this type of two-jurisdictional treatment would only apply in the absence of an express selection of the applicable law and if the \u2018renvoi\u2019 principle applied, as discussed in the preceding paragraph.<\/p>\n<p>In addition, some experts have opined that through the \u2018choice of law\u2019 provision, the testator could even force the application of a trust on assets in France, even though the civil law of France does not recognize the nature of a trust. <a name=\"_ftnref2\"><\/a>[2]These authors argue that the Regulation requires a member country to adapt the rights and obligations applicable in trust law to a corresponding right in their domestic law in order to ensure that the testator\u2019s wishes are respected.<\/p>\n<p>Right then. Another country\u2019s law can be chosen to apply to estate assets in France. &nbsp;Does that take care of it? &nbsp;Not necessarily\u2026. Something that goes against international public order in France cannot be overridden by a choice of another country\u2019s estate laws.&nbsp;&nbsp;&nbsp; The principles of public order in France include the rights and dignity of human beings, the basic laws of political, family and social rights of French society, and other fundamental features of French law.&nbsp;&nbsp; Any attempted infringement of these principles by foreign law would be blocked in France.&nbsp; Consequently if the testator\u2019s stated intent is judged to be contrary to international public order in France, it will not be possible to apply that stated intention to assets in France.<\/p>\n<p>In summary then, the EU Regulation offers two choices:<\/p>\n<ol>\n<li>The testator can decide to not make a choice of laws, in which case there is a risk that the French law may apply. Therefore it is important to consider these risks based on the nature of the assets and wishes.<\/li>\n<li>The testator can make a clear choice of applicable law for the entirety of his or her estate, such as either Canadian or French law, so long as the basic principles of international public order in French law are not infringed when the Canadian law is applied to the testator\u2019s Will.<\/li>\n<\/ol>\n<p><strong>3) &nbsp;Forced Heirship<\/strong><\/p>\n<p>The principle of forced heirship (\u2018<em>r\u00e9serve h\u00e9r\u00e9ditaire\u2019<\/em>) is a mainstay of any civil law jurisdiction.&nbsp;&nbsp; The question of whether this is simply a question of codified statute law or \u2018public order\u2019 has been a matter of much debate and uncertainty in France. &nbsp;Two recent court decisions (both released on September 27, 2017) have stated that a foreign law which does not incorporate a forced heirship regime could nevertheless be applied in France.&nbsp; This would suggest that forced heirship is not automatically saved under international public order.&nbsp; Some caution must be exercised: these decisions are not officially reported, indicating that France\u2019s judiciary is not yet ready to publicize them as principles of French law. &nbsp;The decisions may be non-binding and limited to their facts.<\/p>\n<p>Let\u2019s back up a bit.&nbsp;What are the forced heirship rules in French law?&nbsp; In general terms: a portion of the estate must pass on to the deceased\u2019s children (or subsequent issue \u2018by representation\u2019).&nbsp; The patrimony of a person is split into two parts. One is the hereditary reserve which cannot be bequeathed to a third party and can only pass to the \u2018reserved heirs\u2019. The other part is the share that can be disposed of by a Will or gift to anyone that the testator wishes.&nbsp; A spouse is only guaranteed a share of the estate if the deceased did not have any children.&nbsp; The shares are set as follows:<\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"98\"><strong>Number of children<\/strong><\/td>\n<td width=\"156\"><strong>Reserved portion<\/strong><\/td>\n<td width=\"156\"><strong>Disposable portion<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"98\">O<\/td>\n<td width=\"156\">1\/4 to legal spouse<\/td>\n<td width=\"156\">3\/4<\/td>\n<\/tr>\n<tr>\n<td width=\"98\">1<\/td>\n<td width=\"156\">\u00bd to child<\/td>\n<td width=\"156\">1\/2<\/td>\n<\/tr>\n<tr>\n<td width=\"98\">2<\/td>\n<td width=\"156\">2\/3 in equal shares<\/td>\n<td width=\"156\">1\/3<\/td>\n<\/tr>\n<tr>\n<td width=\"98\">3 +<\/td>\n<td width=\"156\">3\/4 in equal shares<\/td>\n<td width=\"156\">1\/4<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>4) &nbsp;Formal Requirements<\/strong><\/p>\n<p>The existence of an element of extra-territorial also has an impact on the procedural requirements for the validity of the Will.&nbsp; Having assets in both France and Canada leads to the question: how will the respective courts of each jurisdiction interpret the form of the Will? How would a French court know if a Will prepared and signed in Ontario, was valid? Using the format of an international Will would go a long way to resolving the question, as both France and Ontario have formally adopted legislation to recognize the form of an international Will. <a name=\"_ftnref3\"><\/a>[3]<\/p>\n<p><strong>5) &nbsp;Avoiding Double Taxation<\/strong><\/p>\n<p>Nothing about taxation is ever simple. &nbsp;I won\u2019t attempt to discuss that very complex issue in this blog. &nbsp;Note that in France, there is a very high and progressive rate of taxation on the overall estate value. The current exemption for beneficiaries who are children or parents of the deceased is capped at 100 000 \u20ac, and the tax rate climbs to 45% on a net distribution of more than 1.8 \u20ac.<a name=\"_ftnref4\"><\/a>[4]However, France and Canada have signed a tax treaty to avoid double taxation, particularly on income arising from an estate.&nbsp;These assets will only be taxed once\u2026. <em>en principe!<\/em><\/p>\n<p>Given the uncertainty remaining on all the above, I would probably advise a Canadian with significant assets (especially real estate) in France to sell or gift the property while still living.<\/p>\n<p>&nbsp;<\/p>\n<p><a name=\"_ftn1\"><\/a>[1] &nbsp;See sections 34 to 41 of the <em>Succession Law Reform Act&nbsp;<\/em>of Ontario, RSO 1990 c. S.26.<\/p>\n<p><a name=\"_ftn2\"><\/a>[2]&nbsp; <a href=\"https:\/\/www.cridon-lyon.fr\/wp-content\/uploads\/2016\/04\/Dip-Ouvrage.pdf\">https:\/\/www.cridon-lyon.fr\/wp-content\/uploads\/2016\/04\/Dip-Ouvrage.pdf<\/a>&nbsp;(consulted on 12\/09\/2018)<\/p>\n<p><a name=\"_ftn3\"><\/a>[3] &nbsp;S.42, <em>Succession Law Reform Act<\/em>RSO 1990 c. S.26. (<a href=\"https:\/\/www.ontario.ca\/laws\/statute\/90s26#BK45\">https:\/\/www.ontario.ca\/laws\/statute\/90s26#BK45<\/a>)<\/p>\n<p><a name=\"_ftn4\"><\/a>[4] &nbsp;\u2018La France championne d\u2019Europe de la taxation des successions\u2019, <u>Le Figaro<\/u>17 Sept 2018 ( <a href=\"http:\/\/www.lefigaro.fr\/economie\/le-scan-eco\/2018\/09\/17\/29001-20180917ARTFIG00262-la-france-championne-d-europe-de-la-taxation-des-successions.php\">http:\/\/www.lefigaro.fr\/economie\/le-scan-eco\/2018\/09\/17\/29001-20180917ARTFIG00262-la-france-championne-d-europe-de-la-taxation-des-successions.php<\/a>)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Edited translation of article written by Margot Pitou, Master DRHPS (Univ. de Versailles, France), Research Assistant to Monique J. Charlebois. The original article is posted in the French language blog section of this website.) There are several complications affecting the disposition of property which is situated in France but owned by Ontario residents.&nbsp; First, which <a href=\"https:\/\/moniquecharlebois.ca\/fr\/2018\/11\/02\/ontario-testators-with-assets-in-france-which-law-will-apply\/\" class=\"more-link\">&#8230;<\/a><\/p>","protected":false},"author":1,"featured_media":9210,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[13,14,15],"class_list":["post-9204","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-french-assets","tag-french-law","tag-ontario-testate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Ontario Testators with Assets in France: Which Law Will Apply? - Monique Charlebois<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moniquecharlebois.ca\/fr\/2018\/11\/02\/ontario-testators-with-assets-in-france-which-law-will-apply\/\" \/>\n<meta property=\"og:locale\" content=\"fr_CA\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ontario Testators with Assets in France: Which Law Will Apply? - Monique Charlebois\" \/>\n<meta property=\"og:description\" content=\"(Edited translation of article written by Margot Pitou, Master DRHPS (Univ. de Versailles, France), Research Assistant to Monique J. 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Charlebois. The original article is posted in the French language blog section of this website.) 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