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GREAT HERITAGE! But how to get at it? Retrieving assets in cross-border successions

Private Client Commission Workshop Questionnaire

National Report for France

Agnès PROTON

Avocat au Barreau de Grasse 3 rue de Bône

F-06400 Cannes aproton@ap-avocats.fr

With the contribution of :

Marie Dominique FLOUZAT-AUBA Avocat au Barreau de Paris

286 Bd Saint Germain F-75007 Paris

flouzat-auba@Club-Internet.fr

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TO BE REMINDED :

1. SCOPE OF THE WORKSHOP

The Workshop will focus on the retrieval of assets in cross-border successions.

Due to the fact that the workshop runs only for 90 minutes, we will focus on movable assets (cash, shares, funds, gold, jewelry, art works, etc.) we will not discuss real estate issues.

2. DEADLINES 30.10.2009 List of national reporters shall be finalized and confirmed

08.12.2009 Finalized questionnaires and Transfer of Copyright forms (“ToC”) shall be sent to the national reporters.

22.01.2009 National reports and ToC shall be handed in to the general reporter.

01.02.2010 Final title and abstract of session sent to Work Coordinator

26.02.2010 General report and ToC shall be handed in to the work coordinators.

15.03.2010 External speaker confirmed

24-28 Augst 2010 The workshop will be held at the Charleston 2010 AIJA Congress

As you see the time frame is quite short. Please keep in mind that the General reporter has to read about 15 National reports and write his General Report in less than a month. Therefore it is of the upmost importance that the different deadlines are held.

3. HOW TO PROCEED If you do not now where to start, how to proceed or have questions, feel free to call me.

a. Start to read the questionnaire soon enough

b. Look for the needed material as to write your national report (or have a trainee do it)

c. Write you national report in English

d. Send your national report to the general reporter before the deadline

The national report has to be written according to the “Format-of-Reports 2010.doc”. The Format will guide you trough the expected layout. If you did not receive the Format or lost it please ask me for a copy.

When saving your work, please name the document using the following convention “WS_PCC_(country).doc”. For example: WS_PCC_France.doc

4. CASE STUDY A fellow AIJA colleague calls you and asks for you advice :

The heirs of a deceased party asked your colleague to retrieve the assets of a succession which are partly held in your country. The deceased party had his last domicile in the country of your colleague. Your colleague needs an answer to the following questionnaire.

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5. QUESTIONNAIRE

Please answer the following questions, beeing as down to earth as possible. If a question is not an issue in your country please be kind enough to write why it is not. If you feel that important issues were not adressed by the questionnaire please add them under the question: “Is there anything else which needs to be considered?”

5.1 How does one find the assets in your country or how does he know about it?

In France there are neither central nor local registries for tangible movable assets such as furniture, jewellery, art works... Without any hints regarding their existence, heirs would hardly know of, or find, those assets. There remains the possibility of leading private investigations1, subject to a rebuttable presumption as to tangible property stating that “en matière de meubles possession vaut titre”2. Heirs who would want to retrieve such property out of unwilling third parties’ hands will have to prove that those items belonged to the decedent and that they are entitled to inherit them.

As to cash, funds, portfolios or movables assets held in banking safes/vaults there is a centralised national Register named “Fichier des comptes bancaires” a.k.a. “FICOBA” 3 which may release the following information as to decedent’s accounts existing on the French territory:

- name and location of the bank(s)

- account(s) nature, number, type and features

- account(s) opening or closing operations

- identities of the account(s) owner(s)

However, no information will be provided regarding banking transactions operated on such account(s), as well as regarding the account balance.

Access to this Fichier is a personal right belonging to the account’s owner. Access is also granted under certain circumstances to specific “authorised third parties” - including Police Officers and Huissiers de Justice (Bailiffs) – expressly and strictly determined by law. 4

1 For instance heirs may hire a « Huissier de Justice », or a Private Detective. 2 See article 2276 paragraph 1 of the French Civil Code. 3 The inquiry must be sent to the following address: Centre de services informatiques – FICOBA ADMINISTRATIF – 22 avenue JF Kennedy F-77796 NEMOURS. 4 See article 4 of the « Arrêté du 14 juin 1982 relatif à l’extension d’un système automatisé de gestion du fichier des comptes bancaires » available at : http://www.legifrance.gouv.fr/affichTexteArticle.do;jsessionid=0B22DA57CC1E5B2D20383586A81DA75F.tpdjo13v_3?idArticle=LEGIARTI000020413599&cidTexte=LEGITEXT000006069767&dateTexte=20100130

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Unfortunately, legal professionals such as Lawyers or civil law Notaries are not listed as such5. They will need to get a judiciary authorisation first in order to obtain any information from FICOBA.

Regarding life insurances, since May 1st 20066, any individual or legal entity (or their representatives) wanting to know whether they benefit from a life insurance subscribed by a decedent may address their inquiries to a centralised national organism: A.G.I.R.A. (Association pour la Gestion des Informations sur le Risque en Assurance). 7 This is in line with some of our Insurance Code recently amended provisions; see Article L 132-8 last paragraph:

« Lorsque l'assureur est informé du décès de l'assuré, l'assureur est tenu de rechercher le bénéficiaire, et, si cette recherche aboutit, de l'aviser de la stipulation effectuée à son profit ». – providing that the Insurer who has been informed of the subscriber’s death must in turn inform the beneficiaries.

Information relating to companies and shares may be gathered trough the Registre du Commerce et des Société (RCS), which is a Public Registry that may be accessed on line at www.infogreffe.fr (this is not a free public service though, the information and corresponding documents are billed to the inquirer).

5.2 Which law is applicable to the retrieving procedure for movable assets?

Retrieving assets will imply to get at the “keeper”, hypothetically domiciled in France.

French Jurisdiction will therefore be competent, according to the general principle that defendants must be sued in front of the Jurisdictions where they have their domicile/residence (individuals), seat or branch office (legal entities) 8.

But then – and logically – as to the merits of the case, the law ruling the succession will be applicable.9

5 Notaries may however get financial information from the “Banque de France” Services Succession 75419 PARIS Cedex 9. 6 As a result of the Loi DDAC (= portant Diverses Dispositions d’Adaptation au droit Communautaire dans le secteur de l'assurance) n° 2005-1564 enacted December 15th 2005. 7 To be sent to 1 rue Jules-Lefèbvre 75431 PARIS Cedex 9. 8 See article 42 & 43 of the Civil Procedure Code. 9 E.g.: in order to verify claimants’ quality and rights.

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5.3 What kind of documents are needed to legitimize yourself in case of inquiries and to get information from a third party? Is it different if the third party is a bank?

Organisms or administrations holding decedents’ assets - or information pertaining to those assets – such as Banks, Insurance companies, or Tax authorities, will often “hide” behind confidentiality duties/obligations to restrain themselves from answering heirs’ inquiries (or their legal representatives’ inquiries for that purpose).

As to assets located in France, no matter who the “keeping” third party is, foreign claimants will have to justify that they are entitled to the decedent’s assets:

- if they ground their claim on foreign acts, those acts will have to be officially translated and legalised10;

- if they ground their claim on a foreign judgement, official translation and legalisation of this judicial decision will be needed as well; if judicial enforcement of such decision is sought, exequatur would then also be needed.

However, claimants may have to check on a case by case basis the existence of bilateral international treaties or other international conventions that would alleviate those formalities.

5.4 Which law is applicable to the required documents ?

As a principle, succession documents from abroad (for example: last will, death certificate, documents asserting the heirs’ rights and capacity) are accepted as established by the foreign state of the decedent’s last domicile, subject to the conditions above mentioned under § 5.3.

In practice, banks and other third parties holding assets will show reluctance to abide by foreign acts, be that because of their ignorance of the foreign law, and/or their fear of releasing the assets to the wrong person. As a general statement as well, it is constant that since a couple of decades, financial entities holding assets are reluctant to release them out of their companies…

It will thus prove to be quite tedious to get those entities to cooperate, as they will tend to “add” a lot of requirements to the law and make the paper work quite burdensome to the unfortunate claimant. In such cases though, it is not difficult for the heir’s Legal Counsellor to determine that, at some point, the “keeper” is in bad faith and must be judicially compelled to release the assets. In such cases as well, compensatory damages can also be awarded to successful claimants.

10 The legalisation may be done at the relevant Foreign Consulate in France. See Mariel REVILLARD, Droit international privé et communautaire : Pratique notariale, Défrénois 6ème éd, # 766 and following.

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5.5 Once legitimized, what kind of information can one get from a third party holding assets?

Once “legitimized”, the heirs will be entitled to get all needed information to fulfil their rights and further their claim.

5.6 Once legitimized, what kind of information can you get from a bank holding assets?

As to banks, in order to further their claims as above said, heirs should be able to get for instance: statements of account up to the last 10 years11, the list of holders of proxies, the list of any existing safe, certified amount of balance(s) at the time of death and as of now, explanations as to suspect transactions on the account …

It is worth keeping in mind that all unjustified or abusive reluctance may be overcome with a judicial order condemning the bank (or any third party / assets’ “keeper” for that purpose) to release the needed information, under financial constraint.

5.7 Is there any difference in the information you get if you are a foreigner or a local?

Subject to submitting all proper justifications above mentioned, there is no difference in the information made available to foreigners or locals.

5.8 Is it possible to get information from a third party (or a bank) without being formally legitimized?

Third parties and banks are subject to professional secrecy. Therefore, they will most likely (and pertinently) deny access to assets and / or information pertaining to the latter if the claimant is not properly and officially “identified”, ie if he does not produce all required legitimized evidence as to his status (ie identity & capacity) and his rights.

11 Claimants must be aware – as to bank account statements - that investigations and printing are billed to them by the banks. Costs can be totally different from one bank to the other, so that in some cases such research may end up being very expensive. Is this another way to “not cooperate” with claimants, in order to postpone the release of the assets? Well, this could be subject to further discussion…

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5.9 What does one do if he can not provide the needed documents or the needed information to fill in the required documents?

Of course, the flexibility of the “keepers” to release information, and eventually the assets, will depend on whether (or not) they are subject to professional secrecy duties & obligations. The stricter the obligations, the heavier the burden of proof will lay on the claimant to justify his position.

Although, and again, if the keeper’s demands would appear abusive and uselessly burdensome or “rigid”, the heir may always try to convince the Judge of the rightfulness of his claim first. If successful, he will get in turn a judicial order compelling the third party to yield to the claim.

In order to support their judiciary request, plaintiffs will have to provide the Judge with whatever evidential elements of which they dispose (such as affidavits, will, birth/death certificate), short of the said proper “required documents”. The drawback of this last resort (judicial) solution is – as always – procedural costs and time…

5.10 Is it possible to freeze the assets if the claim on them is not clear or if time is needed to provide the needed documents or are there any other ways as to secure the assets?

Yes, definitely, a seizing order may be granted through a speedy proceeding by the Juge de l’Exécution (the Enforcement Judge) in order to freeze the assets. The petitioner presents a “Requête aux fins de saisie conservatoire” (= request for a conservatory seizure), that will be granted provided that the claimant’s rights and claim are properly evidenced, and if it appears that two conditions are met:

- Granting the seizure must be a matter of urgent necessity (= the “emergency” requirement),

- The plaintiff’s rights must be in jeopardy (eg there would be an actual threat of disappearance or embezzlement of the assets).

Shortly after the seizing authorization is granted, the plaintiff will have to file a petition on the merits of the case with the regular competent juridiction (see above § 4.2). 12

12 See articles 210 and following of the “Décret n° 92-755 du 31 juillet 1992” , in the Appendix provisions of the Civil Procedure Code.

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5.11 Who can retrieve the assets? Does someone need to be appointed locally?

All heirs and legatees are entitled to directly retrieve the assets, providing they meet the burden of proof above stated (= to bring proper evidence as to their identity and the rightfulness of their claim).

They also may appoint a local representative (a Lawyer, a Public Officer such as a Notaire or a Huissier de Justice, an Agent….). However, if the representative is not a professional, the claimant may expect the “keeper” to be suspicious (again!). This will amount to demands for further documents, pertaining this time to the representative’s capacity and power of attorney.

5.12 Are there any legal requirements a local lawyer would have to consider if he is asked to retrieve assets for a foreign country, one of its public officers or a foreign lawyer?

There are no specific requirements other than those stated in our national regulations applicable to economical relations and financial exchanges with foreign countries. 13

5.13 What kind of documents need to be filled in on the side of the third party holding the assets?

In such case, the tax filing of a “Déclaration de Succession” is mandatory in France, so that the proof of such filing will be asked by the third party holding the assets before releasing them. 14

The Tax administration/authorities will then issue a “Certificat d’acquittement de droits” if taxes were paid, or a “Certificat de non exigibilité de droits” if no taxes were due.

Whether succession taxes will be paid in France or not will depend on the relevant international tax treaty, if there is any applicable in the case at stake: see below § 5.18.

Also in some cases, there are declarations to be filed with the Customs administration/authorities.

13 See Mariel REVILLARD, Droit international privé et communautaire : Pratique notariale, Défrénois 6ème éd, « Relations Financières avec l’Etranger » # 1008 and following. 14 As to the modalities and time frame for filing such “Déclaration de Succession” see Mariel REVILLARD, Droit international privé et communautaire : Pratique notariale, Défrénois 6ème éd, « Fiscalité internationale des successions » # 730 and following.

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This is so because, while individual residents in France may have foreign bank accounts and may freely transfer money outside the territory, those accounts and transfers (above 7600 euros) must be declared to the French Customs. 15

5.14 Are contacts with authorities necessary or mandatory? If yes, which authorities and why?

In light of the above mentioned formalities and obligations, contacts with the Tax and/or the Customs authorities will be mandatory.

5.15 Are authorities subject to act automatically? If yes, which authorities and why?

Authorities are not supposed to act sontaneously, other than to control a posteriori - and if they deem fit - parties’ volunteered and spontaneous declarations.

5.16 Are there any tax issues to be considered (please stay general) ?

Yes, a “Déclaration de Succession” must be filed and in some cases taxes must be paid in France before the assets can be lawfully wired / transferred abroad – see above § 5.13

5.17 Is it possible to get a safe haven by your local tax autorities as to be sure that every taxes were paid before transfering the assets?

To that purpose, the Tax authorities will provide a “Certificat d’acquittement de droits” or a “Certificat de non exigibilité de droits” cf above § 5.13

5.18 Please make a list of the countries with which your country signed tax treaties regarding successions?

The relevant tax treaties are listed in the chart below:

15 The obligation to declare the money transfers above 7600 euros applies to individual non-residents as well. See Mariel REVILLARD, Droit international privé et communautaire : Pratique notariale, Défrénois 6ème éd, « Détention d’avoirs et de comptes à l’étranger » # 1012 & following.

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5.19 Are there any export restrictions which need to be considered?

Yes, there are export restrictions in France on Art Work and Antiques. 16

5.20 Are there any investment rules to be followed in your country once assets are part of a succession?

Foreign investments in France are strictly regulated, also in light with the fight against terrorism and money laundering. This regulation is complex and is provided in the Décret n° 2003-196 and the Arrêté both dated of March 7th 2003. 17

5.21 Are there any risks of liability for a lawyer (foreign or local) as to the retrieval of assets?

There are not specific rules here, so the lawyer’s (foreign or local) specific deontological constraints and professional liability rules would set the limits as to ways and means to retrieve assets.

5.22 Are there any risks of liability for the heirs?

Yes of course there are risks of liability for the heirs, if they do not respect the provisions of the applicable law(s), eg: the law governing the Estate and ruling the Succession, the law providing for Tax obligations and/or Customs declarations …

This is why – and to that extent at least - consulting a local legal counsellor will always be advisable, in order to check all mandatory compliances the claimants will have to respect.

5.23 Are there any measures to be taken before someone deceases as to simplify the retrieval of the assets in your country?

16 See “ A l’heure de la mondialisation, le point sur l’exportation des oeuvres d’art”, a synthetical presentation of the relevant applicable formalities at : http://www.gazette-drouot.com/static/magazine_ventes_aux_encheres/guide_juridique_des_encheres/021_guide_juridique_des_encheres.html 17 See Mariel REVILLARD, Droit international privé et communautaire : Pratique notariale, Défrénois 6ème éd, « Investissements étrangers » # 1026 and following.

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It would be advisable to include in the Estate Planning process, apart from drafting will(s) and maximizing tax savings, some ways to make sure that the heirs will get the needed information in time, regarding the location of the assets.

Also, ahead, keepers of such assets should be informed of potential heirs’ identity, so that heirs’ capacity could be easier to ascertain afterwards.

5.24 Is there anything else which needs to be considered?

To be mentioned here is the Proposal adopted by the European Commission on October 14th 2009, which should greatly simplify succession rules in the European community. 18

5.25 What would your practical advice be, to someone needing to retrieve assets from your country? Is there any vademecum which should be followed?

Needless to say that, when and if facing any “local” difficulty, heirs and legatees should not save on Lawyers’ fees … and on Lawyers’ precious help for that matter!

As we say in France (wise common knowledge …) and to end up with bon sens if not legalese: …. “mieux vaut un qui sait que dix qui cherchent” !

18 See for instance on this matter the conference announcement posted by the European Law Academy (ERA) on its website: “On 14 October 2009, the European Commission published its long-awaited proposal for a Regulation on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession (COM (2009) 154), which aims to help settle international successions involving people living in the EU…..”http://www.era.int/cgi-bin/cms?_SID=32add90e677e141ec9288faea70d8c3deac2025700029369304886&_sprache=fr&_bereich=artikel&_aktion=detail&idartikel=121048

Also see this comment in the European Journal (October 21st 2009) at : http://europeanjournal.typepad.com/my_weblog/2009/10/eu-to-regulate-successions.html

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Bibliography :

Juris-Classeur PROCEDURE CIVILE :

- ENTRAIDE JUDICIAIRE INTERNATIONALE, Obtention des preuves à l’étranger par Patrice MONIN-HERSANT, fascicule 124-2 ;

- CONTRATS ET OBLIGATIONS, Preuve, Règles générales par Daniel VEAUX, fasc. 10 Art. 1315 et 1316 ;

DIBOS-LACROUX SYLVIE : SUCCESSIONS LE GUIDE PRATIQUE, PRAT, 8EME

ED. 2007 PROTON AGNÈS, NATIONAL REPORT FOR FRANCE, A.I.J.A. ANNUAL CONGRESS

TORONTO AUG 2007 : « To Trust or not to Trust : opportunities and risks in International Estate Planning”

REVILLARD MARIEL : DROIT INTERNATIONAL PRIVE ET COMMUNAUTAIRE, PRATIQUE

NOTARIALE, DEFRENOIS, 6EME ED 2006.