Estate Planning

Forced Heirship

In England, Wales and Northern Ireland, clients can leave assets to whomever they choose. In most European countries, including Scotland, this is not the case. The laws of succession define specific rights for certain persons (the protected heirs). Whatever a Will might say, it can easily be overturned by the protected heirs. This is known as forced heirship.

Forced heirship rules restrict the ability of a testator to decide how his assets should be distributed after his death. The exact rules differ from country to country. Some countries may insist that upon death, all the property of an individual domiciled in that country must, in every circumstance, pass to their forced heirs. Other countries however, may permit a testator to give away a proportion of his estate, provided the balance passes to forced heirs.

What that means is that your estate is split according to the country your wealth is held in. Civil law legal systems under these circumstances do not recognise total freedom of testation, and so the deceased's estate is first in-gathered, then distributed, then wound up. This means accepting inheritance also includes accepting the liabilities attached to inherited property.

Countries that this applies to include France, Switzerland and many Islamic countries. Forced shares may include the legitimate (child's share) and the marital (spousal) share. This provides a minimum protection that cannot be overridden by Will. The last portion, the disposable share (or free estate), is at the discretion of a testator to distribute assets by will or codicil on death. Heirs succeeding to property this way are known as forced heirs.

To avoid forced heirship, wealthy individuals sometimes seek to circumvent forced heirship laws by transferring assets into an offshore company, and seeking to settle the shares in the offshore company in a trust governed by the laws of a jurisdiction outside their domicile.

Where forced heirship is a possible consideration for expatriates, you should find out what forced heirship may mean for you and your family and work with your financial adviser to ensure your family is adequately protected.

Contact us today for more information.