It is a common fact pattern where international families are concerned: the generator of the family wealth, perhaps at an early stage in their career, marries and bears children; later, the marriage ends (through divorce or death), and the richer party moves on and eventually starts another family, perhaps in another country, all the while continuing to build a fortune. A will is made, or trusts are set up. Years later, the patriarch/matriarch dies, and it is discovered that the first family has been completely disinherited. Or has it? Concepts such as forced heirship and community property are well known to private-client practitioners but, as the court reports demonstrate, many wealthy families continue to be caught out by the reach of such claims.

Forced heirship has its roots in civil-law systems and generally provides that a certain portion of a person's estate must be distributed to particular heirs upon death. The rules vary by jurisdiction but can be found in one form or another in countries such as Germany, France and Spain, as well as in Sharia legal systems and certain Asian and Latin American countries. They are in contrast with common-law jurisdictions, which tend to favour testamentary freedom.1 Many of these legal systems also provide for community of property, whereby assets acquired during the marriage are subject to specific rules for division upon the end of the marriage.

If an individual who is subject to the succession rules of a forced heirship jurisdiction seeks to transfer their assets (before or after their death) outside the scope of the forced heirship rules, a spouse and/or other heirs who are thereby deprived of their compulsory shares may be able to bring claims seeking to set aside the individual’s purported transfer of assets — whether by attacking the validity of any will or seeking to undo their lifetime transfers of property to third parties.

Of course, in response to this, many offshore financial centres have passed 'firewall' legislation to try to protect assets transferred to structures in their jurisdictions from falling within the scope of such succession claims. However, there are many situations in which individuals wish to transfer assets (before or after their death) into jurisdictions with no protective firewalls, such as the UK (a popular destination for international families with sizable property portfolios). If those individuals could be subject to the succession rules of a forced heirship country, advanced planning is critical to reduce the risk of the transfers being set aside by future forced heirship claims.

In particular, clients should be advised that they may find it difficult to favour the children or spouse of a later marriage at the expense of children from an earlier one. A recent high-profile example concerns the famous singer Johnny Hallyday (the 'French Elvis') who passed away near Paris in 2017. According to media reports, the four-times-wed performer's two adult children from prior marriages challenged a will, drafted in California, which purported to leave the entirety of Hallyday's EUR 38 million estate to his final wife, with whom he adopted two young children. The adult children succeeded in establishing that their father was habitually resident in France before his death, overcoming the widow's case that he had made his primary home with her in Los Angeles since 2007 (which would have enabled him to dispose of his estate free of restrictions, in accordance with Californian law). While the case caused outrage in France at the suggestion that their beloved entertainer was more American than French, the court more soberly undertook an analysis of the singer's Instagram posts to calculate how much time he spent in his birth country during his final years.

The elder children's success meant French succession laws applied to Hallyday's worldwide assets and that they each qualified for an 18.75% share of his multimillion-dollar estate.2 His widow said she would appeal, but the case ultimately settled on undisclosed terms.3

Similar claims feature in a case pending in the US District Court in the District of Columbia,4 the latest chapter of the long-running dispute over the estate of Wang YungChing, a plastics tycoon and one of Taiwan's richest men ever. The plaintiffs, who are the joint executors of Mr. Wang's widow's estate, assert an entitlement under Taiwanese law to 50% of the couple's marital estate5 and a claim to recover assets transferred to third parties without the widow's consent during the last five years of Mr. Wang's life,6 plus restitution.

Mr. Wang and his wife were never divorced during their 72-year union, although Mr. Wang purported to marry various other women, and had at least three other families and at least 12 children by those companions, before dying intestate at the age of 91. While he spent most of his life in his native Taiwan, Mr. Wang — like the French Elvis — travelled regularly to the US and died there in the home of one of his ‘wives’. This complex fact pattern has led to an ongoing legal battle worth billions of dollars about the relevance of Taiwanese forced heirship rules to the family’s overseas assets. The US proceedings are expected to go to trial next year.

Both of these cases highlight the potential dangers and substantial implications of forced heirship claims and, therefore, the importance of careful succession planning for international families. As another Valentine’s Day comes and goes, high-net-worth individuals would do well to pay attention not only to their current paramours but also to those relationships that they might feel are in the past but which — depending on the legal systems involved — may give rise to inviolable claims.