Domicile – the increasing prominence of social media
In today's world, cross-border issues throw up complexities around matters such as divorce, inheritance and wealth transfer. The European Union in 2015, for example, enacted a succession directive, known as "Brussels IV" to give citizens in several EU member states (excluding the UK, Ireland and Denmark) greater freedom over the jurisdictions in which their wills are recognised.
The use or misuse of domicile can come to light in a number of ways. A recent case involving the use of social media and a famous deceased French pop star adds to the mix. To discuss this issue is Amy Lane, solicitor at Thomson Snell & Passmore, the law firm.
The question of domicile is important when deciding which law (and taxes) apply to your estate. The death of France’s biggest rock star, Johnny Hallyday, has thrown domicile back into the spotlight once again, largely due to the use of Instagram. Once dubbed the French Elvis, Johnny’s death has caused an ongoing dispute between his widow and two of his children. Johnny had spent much of his time in Los Angeles and obtained a green card, having said that he would never return to France unless their tax laws changed, following the introduction in 2014 of 75 per cent tax on income over €1.0 million ($1.11 million).
Johnny’s will left his estimated £89 million estate to his wife, Laeticia and disinherited two of his children, Laura and David, from previous relationships. Laura and David brought a claim against his estate in France to argue that their father was domiciled there at his death, using his Instagram account to prove that he was most closely connected to France, not Los Angeles. A successful claim would mean the law on French heirship would apply, meaning Laura and David would inherit, despite Johnny’s Will saying otherwise.
French law imposes forced heirship based on the Napoleonic Code. This means that you cannot divide your estate freely as you desire under the terms of your will. French law specifies a minimum proportion of your assets, whether worldwide or in France, must pass to your children and you cannot use your Will to avoid this. By comparison, under English law, you are free to dispose of your assets as you see fit under the terms of your will. It is only the rules of intestacy (where you die without a will) that dictate where your assets go on death.
In addition, under English law, certain individuals have an automatic right to bring a claim for reasonable financial provision through the courts against an estate under the Inheritance (Provision for Family and Dependants Act) 1975, provided the deceased was domiciled in England & Wales at death. In France, you are not entitled to bring a claim against an estate for financial provision unless you are a spouse or parent of the deceased. Therefore, Laura and David would not have been able to bring such claim and therefore had to rely on domicile.
Prior to 17 August 2015, two laws applied to your assets on death. Moveable assets i.e. bank accounts devolved in accordance with the country of residence at death, and immoveable assets i.e. property devolved in accordance with the law where the asset
In 2015, Brussels IV came into force which specifies that the default position is that the succession of your estate depends on your habitual residency at death. However, if you live in an EU country (other than the UK, Republic of Ireland and Denmark), you can choose under the terms of your wll (by including an express declaration) to elect that the law of your nationality apply. Therefore, if you are an English national who is resident in France, you can elect that the law of England and Wales applies to the devolution of your estate, thus avoiding the forced heirship rules.
It must be emphasised, the law that applies to your estate on death is different to the application of the tax on your estate, and if you are minded to leave your estate differently to the forced heirship rules in France, it is recommended that tax advice is taken.
Interestingly, in this case, the French courts took into account Johnny’s Instagram posts which showed a timeline of his movements before his death. Laura and David argued that the 151 days he spent in France in 2015 and the further eight months leading up to his death, where he was being treated for cancer. The French Court agreed with their timeline of events, ruling that Johnny’s estate should pass in accordance with the rules on French succession, concluding this was his last domicile, and therefore forced heirship governed the succession of his estate, not his will.
The decision is going to be appealed but nonetheless serves as a useful reminder about the increasing prominence of social media, not only in lives today, but after death too.
Article first published in Wealth Briefing here https://www.wealthbriefing.com/html/section.php?keywords=Amy+lane