Trusts and Forced Heirship
By Nigel Rotheroe
Most people have never heard of the term “forced heirship”, yet they are often aware that inheritance laws differ across jurisdictions. You might first encounter it when buying overseas property and a local lawyer advises you to make a local Will to comply with succession rules.
This was my experience in 2009 when I purchased a home in France. Given my wife and I had both been married before and had children, we were advised to acquire the property through a French company (a Société Civile Immobilière – SCI) so we could pass on our interests as we wished.
Thankfully, the EU Succession Regulation (EU/650/2012) – known as Brussels IV – came into effect on 17 August 2015, allowing individuals to choose which country’s law governs the distribution of their estate within the EU.
What is Forced Heirship?
In some countries, a testator (the person making a Will) has full freedom to distribute their estate as they wish. However, many jurisdictions impose forced heirship laws, which require a portion of the estate to be passed to certain protected heirs such as a spouse, children, or close relatives.
Typically, forced heirship only applies to part of an estate. The remainder can still be distributed freely. However, under Sharia (Islamic) law, an individual may only distribute one third of their estate as they choose; the remaining two thirds must be distributed according to religious rules. For example, sons often inherit twice the share of daughters.
Generally, moveable property (personal property) follows the law of the testator’s country of residence, while immoveable property (real estate) is governed by the laws of the country in which it is located.
Why Does Forced Heirship Exist?
The rationale is that individuals should make adequate provision for their family and dependants. The counterargument is that neither the state nor religion should restrict how someone disposes of their assets on death, if they were free to gift them as they wished during their lifetime.
Where Does Forced Heirship Apply?
Forced heirship is common in civil law jurisdictions but can also appear in some common law countries:
Ireland: Under Section 111 of the Succession Act 1965, as amended:
A surviving spouse with no children has a right to half of the estate.
A surviving spouse with children has a right to one third of the estate.
Isle of Man: There are no forced heirship provisions. The Trusts Act 1995 specifically provides that any disposition of property under an Isle of Man trust will be governed solely by Manx law, without reference to the laws of other jurisdictions.
How Can Forced Heirship Be Mitigated?
While many people are content with leaving wealth to spouses and children, forced heirship laws can limit flexibility. Steps to mitigate include:
Relocating to a jurisdiction without forced heirship provisions.
Lifetime gifting (noting some jurisdictions restrict gifts made within a set period before death).
Establishing a family trust to benefit chosen heirs and recording your wishes clearly for the trustees.
Reviewing family business structures, including how shares or interests are held.
Seeking professional legal advice on how forced heirship applies to your estate and what strategies are available to protect your intentions.
Conclusion
Forced heirship laws can significantly affect how your assets are passed on. Whether you hold property abroad, have a blended family, or wish to provide for beneficiaries outside your immediate heirs, it is essential to understand the impact of these rules.
A properly structured trust can often provide the flexibility and certainty that forced heirship restricts.
To find out more about how trusts can help mitigate forced heirship risks, please get in touch.