Testamentary freedom: A global paradox

Wed 24 May 2017, Philippe Ropenga Forced heirship

A mother disinherited her daughter completely since the latter left home at the age of 17 to live with a man, marry him and raise her children with him. She disapproved her daughter for having done so. Mother and daughter had been estranged for more than a quarter of a century until the mother's death in 2004. The mother knew well that under English law she was able not to leave anything to her daughter. She thus decided to give her entire estate to charities. On the other side of the Channel, a father owned an apartment in Paris and knew that his children were his forced heirs and that they therefore were entitled by law to a share in his estate. He however left everything to his wife and died in 2009. If one applies the well-known principles regarding successions in English and French law, these cases are easy to decide: the daughter should not receive anything while the French heirs should receive their share of the estate. These cases have been recently decided. The purpose of this post is to show that even if they are different, they raise similar difficulties. What explains these similarities despite a different legal and factual context? How can the practitioner tackle the issues raised by these cases? It will be seen that solutions to these cases are the result of an ongoing trend (1) that brings new challenges for the practitioner (2).

1 The result of an ongoing trend

Difficulties that these cases raise are caused by changes affecting family. These changes have an impact on the way disputes are solved. Separate analysis of these cases makes this impact hardly noticeable. It therefore is interesting to compare English and French approaches of testamentary freedom (1.1) before highlighting the globalisation of families (1.2).

1.1 English and French approaches compared

English law ignores forced heirship. This means that a testator can give his entire estate to a person of his choice and that he is not obliged to give a part of his estate to some heirs known by law as forced heirs. According to the Inheritance (Provision for Family and Dependants) Act 1975 (the Act), a claimant can ask a jurisdiction to give him a part of the deceased's estate if it can be established that the testator did not make "reasonable financial provision"¹ for him in his will. Section 3 of the Act distinguishes between a spouse or partner and other claimants. Claimants other than a spouse or partner can only ask the judge to make a provision that covers reasonable maintenance expenses. The Act however does not provide any further guidance regarding the determination of the financial provision that can be made. In Ilott v The Blue Cross and others², it appeared that the claimant lived with her children and husband on limited means, used an old household equipment but was not insolvent. A financial support could help the claimant to maintain her home. The estate could provide the financial support needed, but the testator left everything to three charities and made clear that she did not want to give anything to her daughter. Lord Hughes expressed his view in a judgement that has been unanimously approved. Lady Hale gave a concurring judgement that highlights the evolution of legislation.

According to the Court of Appeal, District Judge Million made two mistakes while determining what the reasonable provision should be. To put it short, the Supreme Court had to answer the following questions:

Does the judge have to decide what the reasonable provision would have been without the estrangement before reducing the amount awarded? According to Lord Hughes, it is unnecessary³. Does the judge have to precisely calculate the effect of the sum awarded on benefits received by the claimant? His lordship considered that it only had to be taken into account, and thus approximation was allowed⁴. One can see that this case preserve the principle of testamentary freedom in English law. Testamentary freedom also is linked to public interest. Charities that rely on testamentary freedom to receive the support they need from the public have welcomed this decision. Testamentary freedom however clearly is modulated by the necessity to take care of his family.

If one now turns to a recent French appeal case⁵, a father transferred the title to his Parisian apartment to a company in order i. a. to trigger the application of Californian law to his succession. A previous post explains how a company can be used to circumvent French forced heirship rules⁶. This estate plan worked out: the Paris Court of Appeal has decided that the testator could transfer the title to a company before leaving his entire estate to his surviving spouse i. a. to circumvent forced heirship. According to the Paris Court of Appeal, forced heirship is a matter of public policy within the French society but ceases to be a matter of public interest outside France. There are principles that govern international situations such as prohibition of discrimination. In French law too, testamentary freedom is linked to public interest. Freedom is limited to preserve public interest since it traditionally is imposed to avoid the dispersion of family assets. It seems that French and English law follow two opposite directions: English law has to consider restrictions to testamentary freedom while French law seems more lenient than before.

If however one steps back to look at the global picture of testamentary freedom, one can see that these evolutions are the result of the globalisation of families.

1.2 Globalisation of families

Globalisation imposes to pay attention to affective bonds and to fairness.

In French law, forced heirship was traditionally used to avoid dispersion of assets. Forced heirs are entitled to receive part of the estate and thus are able to maintain the estate and to valorise it, notwithstanding a capricious and careless will, before giving to the next generation. In English law, in contrast, testamentary freedom allows to structure the estate and to pass it on the most capable descendants or to give it to a charity. The society has changed. In French law, the 1975 act on divorce authorised the modern form of divorce based on mutual consent⁷. In 2001⁸, new rights to the estate of the deceased have been recognised to surviving spouse. According to article 914-1 of the French civil code, in its original version, if a person died without issue nor ascendants, the surviving spouse was entitled to a quarter of the deceased's estate as forced heir. In 2006, ascendants have lost the quality of forced heir and this article has been modified accordingly. Since this modification, if a person dies without issue, the surviving spouse is entitled to a quarter of this estate in full ownership⁹. Before the introduction of article 914-1, the surviving spouse could be left without anything if the deceased had given his entire estate by will to someone else. Children seemed more important in law than the surviving spouse. This approach makes sense if one sees family as a lineage. With succession as with divorce, bonds of love are more important than ever. After 2006 and the abolition of forced heirship for ascendants, the prevalence of love over lineage became even clearer. The legislator clearly wishes to adapt law to this change¹⁰. A similar trend has been identified by Lady Hale in English law. In her judgement, her ladyship interestingly analyses the evolution of English law alongside with studies that mention lineage, equality, and fairness¹¹.

Lord Hughes also noted that the Law Commission¹² did not want any financial provision made for the surviving spouses to be restricted to maintenance since undivorced surviving spouses would in practice have been treated more harshly than divorcing spouses¹³. Social change can have diverse consequences: switching from the lineage conception to the love-centred approach displaces attention on the married couple and on children. During divorce or succession, the surviving spouse may find himself or herself in a difficult situation and therefore is protected by law. Protection of the surviving spouse has an impact on testamentary freedom or forced heirship. It may seem that Ilott v The Blue Cross is a case that considers the opportunity of departing from testamentary freedom while the case decided by the Paris Court of Appeal admits forced-heirship avoidance. From a global perspective, it however appears that English and French law converge towards the protection of the surviving spouse.

Globalisation also put the spotlight on fairness

Similarly to affective bonds, fairness tends to restrict testamentary freedom. A provision is made against the testator's wishes because it would be unfair not to give anything to the claimant¹⁴. Similarly, the Paris Court of Appeal decided that forced heirship could be avoided in an international situation but made clear that testamentary freedom, even in an international context, could not violate essential principles of non-discrimination protected by international public policy. Even if English law also tends to converge towards the protection of fairness, these countries have their own perception of freedom or fairness. French judges are more likely to intervene on the basis of equality to restrict freedom than their English counterparts.

It has been seen that, due to globalisation, English and French laws converged towards the protection of the surviving spouse and were in search of fairness. This situation brings new challenges for the practitioner.

2. New challenges for the practitioner

This trend imposes to deal with freedom and values (2.1). Practitioners have to find how to tackle these issues (2.2).

2.1 Dealing with freedom and values

Implications of Ilott v The Blue Cross and others may seem clear: testamentary freedom is preserved. According to Lord Hughes, the Court of Appeal has not paid enough attention to the testator's wishes. Gifts made for the public interest should also be preserved¹⁵. Furthermore, Lady Hale insisted on the fact that the Court of Appeal should not have interfered with the order made by the District Judge¹⁶. This case preserves testamentary freedom but does not provide precise information on how to determine the provision that should be awarded according to the Act. Her ladyship regrets that law does not provide further guidance regarding this point¹⁷. The same comment can be made about the Parisian case: it has recognised larger testamentary freedom but it has not defined its limits. These cases make the practitioner uneasy. A practitioner wants to know what is legal or not. Contemporary case law often deal with fairness or values, i.e. highly subjective notions. Fairness always attracted attention in law. It however was used to modulate objective criteria that would otherwise have led to harsh solutions. Nowadays, fairness or equality seems to be the ultimate goal. If one also notes that larger freedom is favoured but restricted by less clear limits, the practitioner's job is more difficult, especially when he has to explain that what is legitimate is not necessarily legal and vice versa. There is a difference between legality and legitimacy, and the lawyer has trouble shifting from one to the other. Lady Justice Black sitting in the Court of Appeal has acutely perceived the difficulty in making a value judgement in a given case¹⁸.

It therefore is interesting to find ways to tackle these issues.

2.2 Tackling issues

Accepting the subjective aspect of value: when one makes a decision, one considers elements that are objective such as price, location, and other elements that are subjective such as fairness, morality, or merit. By focusing on criteria that are easy to calculate, lawyers may not pay enough attention to subjective elements that matter to clients and that can be the real cause of the conflict. Hence, negotiating techniques that help to express subjective elements are useful. The lawyer can assist his client in prioritising his expectations to let him discover what matters most to him. By doing so, the lawyer helps to find a reasonable solution to the conflict. Sometimes, using these techniques is not possible since a protagonist may be dead. The lawyer may feel deeply frustrated when he sincerely thinks that an agreement will be reached but discovers that a party still refuses to sign for subjective reasons. Being attentive to subjective elements allows the lawyer to discover that he has embarked on an unfruitful negotiation. Not expecting too much from black letter law: this comparative approach shows that two very different cases based on two different legislations can lead to similar results. Black letter law has to be taken into account but does not by itself lead to the solution. Furthermore, the existence of objective guidelines does not necessarily make the solution easier to apply. French law seems more restrictive because of forced heirship whereas English law seems to promote freedom. Similar difficulties arise in both legal systems since at some point someone has to arbitrate between values, such as testamentary freedom and fairness. This can only be done by a human, not by guidelines. In brief, contemporary law gives more freedom to clients and lawyers to find effective solutions. They should seize this opportunity to minimise uncertainty due to changing times.

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