News and Insights
9 March 2017
The issue of forced heirship & rapport à la masse in Jersey: Continental or full English?
In Jersey there’s no choice on the menu, it’s continental all the way and what follows could change how you view your family finances.
Journalists like to argue that three examples constitute a trend. If so, recent work on four comparable succession cases in this office tells us we have spotted a trend: Jersey’s succession laws are not widely understood and especially not their impact on how parties should behave during their lifetime.
This is the issue of forced heirship (or légitime) and it’s often neglected little cousin, rapport à la masse.
This also matters because there are moves afoot to abolish these rules and the debate may become a lively one. The abolitionists often argue they are not in keeping with modern society, but that’s patently wrong as similar rules apply across many jurisdictions in continental Europe, whose residents would take exception to being told they are old fashioned.
It’s easiest to explain things as a series of propositions - don’t give up if you find the opening ones familiar! Here are four volleys of six bullet points. It’s in the last volley that the chickens come home to roost.
Who inherits movables under Jersey law?
- What follows only applies to movable estate, not land and houses. That’s not necessarily logical; it’s just the way things are
- Broadly speaking in Jersey you must leave two-thirds of your net movable property to your heirs, i.e. one third to your spouse/civil partner and one third to your children
- If you die a widow(er) your children may claim two thirds, if you have a spouse/civil partner but no issue they may claim two thirds
- If you have a child who predeceases you but they had children of their own those grandchildren step into their parents’ shoes for all purposes
- You are free to leave the last third of your net movable estate to whomsoever you like
- If you make a will of movables disregarding these rules, the disappointed heir can apply to the Royal Court to have it adjusted so that it operates as they require
What about gifts made during life?
- Once one accepts the idea of fixed shares for the heirs the penny drops that it has implications.
- What happens if a widower’s two children each want their one third but during his lifetime he made generous gifts to one, but not the other?
- The answer is that the lifetime gift must be brought back into account by its recipient when all the sums are done. This is what rapport à la masse means.
- This accounting is made at the value of the gift when made, not at its value when accounted for.
- The recipient can decline to make such accounting, but only if they renounce their rights to the deceased’s estate.
- Many contend that the recipient cannot decline to account if the value of the lifetime gift exceeds the value of their forced heirship right plus the free third.
What can be considered as a lifetime gift?
- A lifetime gift will arise if money provided by the deceased was put into a joint account with an heir.
- A lifetime gift can arise if money was put into trust for an heir.
- A lifetime gift need not be of money; gifts of chattels or company shares would count as well.
- There is no clear limit on how far back one can go in asking for lifetime gifts to be brought into account.
- Unless stated otherwise lifetime gifts to heirs are presumed to be an advance payment on their heirship rights.
- The donor must specifically say so if they want the gift to be deemed to come (in full or as far as possible) from what will be the free third of their estate.
Has your succession plan provided for these eventualities?
- Many modern families consist of co-heirs who are half-siblings because the deceased remarried.
- In many modern families, large lifetime gifts are made by the Bank of Mum & Dad to help a child onto the housing ladder.
- There are many families who have moved to Jersey from England where these rules are unheard of
- Many family offices in Jersey are running the finances of persons with a Jersey domicile, meaning their movable estates are subject to Jersey law .
- In many HNW families, there will have been a history of gifts, loans, share transfers, trust creation, joint accounts and other transfers of value between the generations.
- A disappointed heir applying the rules of rapport to such a family history could upset some carefully laid plans, even if everything was carefully recorded as it happened.
Food for thought we think.