The New York Times recently took the opportunity to highlight this question in an article based on the hotly litigated estate of French celebrity Johnny Hallyday. The Hallyday family is currently fighting over whether or not his estate should pass according to French probate law or California probate law. California allows freedom to distribute assets however one wishes – while French Law does not. Under french inheritance laws, one cannot “disinherit” children, in fact they are obligated to leave specific minimum amounts to children.
In addition to an internationally litigated issue, the disinheritance of one’s children is also a hot topic among trust and estate attorneys in California. It’s a question that is regularly dealt with by trust and estate litigators and debated by estate planners. Therefore, each Trust and Estate Attorney who drafts estate plans must come up with their own “guidebook” when it comes to advising clients on unequal distribution of assets to children.
Disinheritance or unequal distribution can potentially have devastating consequences. Disinheritance can lead to litigation that takes a huge emotional and financial toll on one’s children. I have handled a number of trust and estate litigations over this exact issue. In certain circumstances, complete disinheritance or uneven distribution among children makes sense. Take the situation of a son who has not been seen for twenty plus years, or the daughter who is independently wealthy. One should have the freedom to choose who inherits their assets, right?
One U.S. state doesn’t think so - and neither do the French.
During a recent trip to Paris I learned that French probate law sought to prevent litigation over disinherited family members by developing strict laws regarding the inheritance rights of children and spouses. Derived from the French Civil Code or Napoleonic Code, these laws were borne out of the French Revolution.
Here’s a quick tutorial on French Inheritance Laws, for those of you who need to brush up on your European Legal Knowledge:
What exactly does French Inheritance Law say?
French inheritance law (Estate law) essentially dictates that if one has children or a spouse, he or she must, by law, leave a specific portion of their estate to their children and/or spouse. This portion is called “the reserve.” For example:
If there is one child, that child receives 50% of the estate
If there are two children, they receive 66.6% of the estate.
Various caveats and further laws exist depending upon one’s exact situation (spouse, no spouse, no children, etc). But in general, the bottom line is that if you’re French you cannot disinherit your children.
This is intriguing from a Trust Litigation perspective because it raises the question: Does the French practice of “forced heirship” decrease the prevalence of trust and estate litigation?
Part of the problem with disinheritance or unequal distribution of a parent’s estate is that the estate can end up in court. A solid number of my trust litigation cases have stemmed from a parent disinheriting one (or more) of their children. So naturally I was curious to see if the French way of doing things minimized the number of litigated trusts and estates.
When speaking to the French Estate Lawyers, I was eager to learn if they believed the restrictions on freedom minimized trust and estate lawsuits – and the accompanying familial disharmony that goes along with them.
Each attorney had a different answer. One thought the French were essentially just more “classy” and hence often resolved differences outside of court. Essentially, he believed the law had no material impact. I had my doubts about this seemingly arbitrary analysis. The other attorney I met with believed that the restrictive French inheritance laws simply opened the door to other types of litigation. And she may have a point.
For example, a number of French people either live and/or store their assets outside of France. This allows them to bequest assets according to laws outside of France (not to mention the tax benefits). However, as demonstrated by the Johnny Hallyday case featured in the Times this week, trying to bequest assets according to the laws of different countries, when one is in fact French, can lead to significant litigation over jurisdiction.
Johnny Hallyday was a French celebrity musician who had a 60 year career in France. In 2007, he moved to Los Angeles with his wife, where they raised their two children. Meanwhile, Hallyday had two grown children in France. Hallyday drafted estate planning documents in the U.S., leaving his assets largely to his new family. When he died, this led to his grown children contesting his estate plan, arguing Hallyday should be considered a resident of France and thus his assets subject to french inheritance law. Hallyday’s wife Laeticia fought back, arguing that Hallyday resided in California and thus his estate fell under California probate code. The French court did not side with Laeticia, ruling this week that France had jurisdiction over Hallyday’s estate. And with french jurisdiction comes forced heirship. The French await the final result, which could take years once the appeal process begins.
My takeaway from the Hallyday case (and my own experience as a Trust and Estate Attorney) is that regardless of what a parent decides to do, communication is key. The laws in France make it possible for a child to willingly renounce his or her share via a legal process. In essence, this means that legally, if a parent wishes to disinherit a child that child must give legal consent. For most of my Clients, that is perhaps an unnecessary step (and unlikely to occur). But it does contain the essence of the importance of communication. In many of my trust litigation matters, it has come as a complete surprise to the family members who have been disinherited. If Johnny Hallyday, for example, had communicated his wishes to his children prior to his death, or even shared estate planning documents, it’s possible that lawsuits could have been avoided.
In the end, my personal conclusion is that we are a nation based on freedom, and freedom is pretty great. With great freedom, however, comes great power. And all of us - whether family members, attorneys, or others involved in the estate planning process - are responsible for using that power wisely.