Optimal tax structuring for real estate on the Côte d’Azur

We refer to an international estate when the inheritance has an international aspect. So there will be an international estate if the deceased held an asset in at least one country other than that of his nationality or residence, or if the deceased dies in a country other than that of his nationality or residence. 

The Hague Convention of 14 March 1978 provides for various cases of automatic change in matrimonial regime merely because of a change of residence. We often talk about "involuntary" change of matrimonial regime, of "time bomb" and of "unsafe" automatic mutability because many spouses are unaware that they have changed their matrimonial regime simply by having moved. What is more, when spouses do become aware of the situation, it is often too late. This automatic mutability can present considerable difficulties in determining the property owned by each spouse, particularly in the context of an estate or divorce settlement. This risk is a real one for all spouses married after 1 September 1992 and who did not sign a prenuptial contract before their wedding or specify under which law they married. For them, the law on habitual residence will replace the previously applicable law in three situations: *When the couple set their new habitual residence in the territory of the State of which they are both nationals. In this case the spouses are automatically and immediately subject to the law of that State. (Example: two French nationals had settled in England after their marriage in 1994. No marriage contract had been signed. If they return to settle in France, they will automatically be subject to French law and therefore the legal regime of community of aquests (limited to assets acquired after the marriage). *When the couple establish their habitual residence for at least 10 years in a country different from that of their first marital residence. In this situation, from the 11th year, the law of the State where the spouses have their habitual residence will replace the law previously applicable. * If the spouses were previously subject to their common national law in the absence of common residence in the same State at the time of marriage. However, it is necessary that the State of nationality has not made a declaration in favour of the national law. (Example: two Moroccan spouses were married in Morocco in 1995, without a prenuptial contract prior to their marriage. The husband was already working in France and returned there to live after the wedding while his wife remained in Morocco. In the absence of a common habitual residence, the spouses were therefore subject to Moroccan law and separation of property. When the wife came to join her husband in France, the couple automatically became subject to the French legal regime of community of acquests (limited to assets acquired after the marriage). ) To avoid the difficulties entailed by this automatic change of matrimonial regime, it is strongly recommended, in an international context, to have a marriage contract drawn up in presence of a notary in order to fix the choice of matrimonial regime. To this end, Ms. Alexandra ETASSE, in charge of the International Department of the Etasse et Associés law office, will advise and assist you in choosing the matrimonial regime best suited to your situation. 

Even without a marriage contract, the spouses are necessarily subject to a matrimonial regime and their marriage entails financial consequences towards each other and third parties. In the absence of a marriage contract, the law implicitly chosen by the spouses in order to define their matrimonial regime must be determined. The rules in order to determine this "implicit choice" are different according to whether the spouses were married before or after 1 September 1992. *For spouses married after 1 September 1992 The provisions of the Hague Convention of 14 March 1978, which came into force on 1 September 1992 in France and several other countries, apply. The nature of this convention is "universal", i.e. it also applies to spouses who are nationals of third-party countries that did not sign the Convention, in order to determine their matrimonial regime in France. The principle is set out in article 4, paragraph 1, which provides that in the absence of a marriage contract prior to their union, the spouses are subject to the law of their first habitual country of residence once married. However several exceptions to this principle are provided so as to designate the spouses' common national law instead of the law of their first habitual country of residence. More specifically, these exceptions apply in the absence of a common habitual residence after marriage and with spouses of the same nationality. *For spouses married before 1 September 1992 For spouses married before 1 September 1992, the rules of French international law and case law apply; the latter adopt the principle of freedom of choice and consider that this choice translates by the selection of the spouses' first matrimonial place of residence. However, this matrimonial place of residence must have a certain stability. In general, a period of two years is needed in order to determine the matrimonial place of residence. However, case law specifies that the presumption in favour of the first matrimonial place of residence may be invalidated by other relevant evidence, depending in particular on the behaviour of the spouses once married. 

When French law is applicable to a succession, the French Civil code foresees that a determined part of the deceased's heritage must compulsorily be assigned to the children, namely half in presence of one child, two third in presence of two children, and three quarter in presence of three or more children. 

           The universal community place the French property in a matrimonial fund, which passes automatically to the surviving spouse. Once again the legal reserve rules are postponed. There are limitations to the use of the universal community, in particular wher there are children from a previous marriage

In an international context, husband and wife have the option of changing at any time the law applicable to their matrimonial regime. However, this choice is circumscribed by and limited to the following laws: -          that of the State of which one of them is a national, -          that of the State in which one of them is habitually resident at the time of the choice, -          that of the State where the immovable assets are located, but only in regard to these assets. This change of applicable law must result from an instrument executed in the form of a marriage contract. It may need to liquidate the previous regime. Steps to publicise such a change are necessary for opposability against third parties