Estate liquidation in the context of incapacity

Thu 30 November 2023, Philippe Ropenga Incapacity Estate management

You know that Alacriter's blog mainly deals with long-term trends. In 2018, I wrote about legal techniques that could be used to smooth estate management in the context of succession or incapacity.¹ You also know that a court may take the wishes of a person regarding the possible designation of a carer into account without following them because the designated carer is involved in family quarrels that are harmful for the incapacitated person.² The court had a chance in this case to consider the interest of the latter since her wishes had been expressed in a mandate for future protection or mandat de protection future earlier. This helped the Court to focus on the practical issue at stake. Unfortunately, protecting vulnerable people under French law means placing a heavy administrative burden that has only little to do with the day-to-day life of the incapacitated person.³

Let us see that this common issue (1) can be tackled by means that are not frequently used (2).

1 A too common issue

An incapacity regime is often applied because of a purely civil issue such as a difficulty to manage contracts that one has to enter into to maintain a household. As soon as the incapacity regime takes effect, one can feel a new administrative burden on top of the civil issue. Relatives of this person may feel completely lost since the incapacity regime may seem totally ineffective to them in the sense that it does not help to tackle the civil law issue directly.

A person may be designated by a court to deal with succession issues as an agent on the basis of a succession mandate⁴ For instance, a French court will probably be willing to assist someone that it has appointed by authorising a sell of property later on. The postmortem mandate or mandat à effet posthume may be used with professional goods and combined with a fiducie that enables the fiduciaire to tag specific goods that he is managing for a given purpose.⁵ Let us imagine that a company is run by the agent designated by the postmortem mandate. This agent may then liquidate the estate or find someone else to take the business over. The business is managed under fiducie in the meantime.

These administrative issues frequently get worse because some solutions are not often used.

2 Infrequently used solutions

These mandates have to be considered by the practitioner because not many people wish to deprive a person from autonomy in order to enjoy filling more paperwork. It seems to me that many people are tempted to rely on an incapacity regime because they think that it will give them powers that they need to overcome practical issues caused by a disability. This is however not how incapacity regimes work: they prevent incapacitated people from making decisions that are not in their interest but do not provide any straightforward solution to a practical issue. This is why incapacity has to be distinguished from disability.⁶ A disability is a condition that hinders a person from doing something that he has decided to do and would probably have done on his own if he could whereas incapacity affects one's legal status. A mandate creates a situation that empowers someone to act to tackle a civil issue while whereas incapacity regime sets an unreliable will aside.

Let us now see that there is a solution to successions matters that have been neglected for some time because of the lack of interest of potential heirs.

A department of the French tax office called domaines can identify pieces of property that belong to a vacant succession. A curator can then be appointed by a court to deal with the estate liquidation.⁷ It is better to determine the place where the main assets are located before contacting domaines since this administrative body is divided into regional sections and each curator works for one section only. Hence, a curator may refuse to deal with a matter if he thinks that one of his colleagues works closer to the main assets than he does. As one can see, there are many solutions that can be applied to solve thorny issues. Choosing the right one or combining some of them requires time and is certainly not as easy as following a standard procedures or filling a standardised from. This is probably why people, including lawyers, do not use them frequently. It is regrettable since French public services experience difficulties with practical issues. These tools involve negotiation and planning. They enable stakeholders to consider the situation that they face from a different perspective⁸. Using them helps to achieve practical results.

In brief, there are solutions other than litigation that can be used to address succession or capacity issues effectively.

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