A mother divides her assets between her three children by a gift partition (donation-partage, a lifetime gift that distributes a parent’s assets between the heirs), and each child accepts its valuations. After her death, a daughter and her son’s children, disputing the valuation of the buildings, seek its reduction (réduction, the cutting back of gifts that exceed what the parent could freely give); the court of appeal holds their acceptance against them. In a reported decision of 25 May 2016, the Cour de cassation (the French supreme court for civil and commercial matters) partially quashes the decision on the reduction claim: for the computation of the reserve (réserve héréditaire, the share of the estate the law guarantees to the children), “the gifted assets must be assessed at their real value at the date of the gift partition, whatever the values stated in the deed may have been” (translated from the French). A gift partition freezes a date, not figures, and the valuer reconstructs the value of each lot at that date.
The facts
A mother, married under community of property to a husband who had died, made various gifts to each of their three children, two daughters and a son, including a gift partition. After her death, on 12 July 2006, her son died in turn, leaving three children. Disputes arose over the liquidation and partition of the mother’s estate.
One of the daughters and the son’s children, succeeding to their father’s rights, sought the reduction of the gift partition. The court of appeal, whose seat and date the published decision does not give, dismissed those claims. In its view, the deed provided for no reserved usufruct, the valuations and allotments had been accepted by each reserved heir under the conditions of article 1078 of the French Civil Code, and each, having received a third, had received their full entitlement. It added that, having accepted those valuations with express reference to that article, none of the co-partitioners could call them into question, “in particular on the pretext that all the real estate had been undervalued”, their revaluation being in its view irrelevant to the outcome of the dispute.
The decision
The First Civil Chamber partially quashed the decision (Cass. 1re civ., 25 May 2016, appeal no. 15-16.160, reported).
After rejecting a complaint that did not concern valuation, the Court examined the reduction claim on the basis of article 1078 of the Civil Code, read with articles 913, 920 and 922 of the same code. It recalled that “it follows from the first of these provisions that, where its conditions are met, the gifted assets shall, unless otherwise agreed, be valued at the date of the gift partition for imputation and for the computation of the reserve”. Imputation determines whether a gift is charged to the beneficiary’s reserved share or to the disposable portion (quotité disponible), the part the parent may give away freely. The Court then censured the court of appeal, since “for the computation of the reserve, the gifted assets must be assessed at their real value at the date of the gift partition, whatever the values stated in the deed may have been”.
The quashing, limited to the dismissal of the reduction claim, sends the case to the Agen Court of Appeal. The Court does not say that the assets were undervalued, nor to what extent. But the refusal it censured rested on each heir’s acceptance of the valuations: that acceptance therefore does not make the deed’s figures untouchable for the computation of the reserve.
What this changes for valuation
A frozen date, values to be checked. For ordinary gifts, article 922 of the Civil Code notionally adds the gifted assets back to the calculation pool according to their condition at the time of the gift and their value when the estate opens, as the article on gifted land valued as bare land recalls. Article 1078 departs from that rule for the gift partition: unless otherwise agreed, the assets are valued at the date of the deed, provided all reserved heirs living or represented at the death received a lot and expressly accepted it, and no reserved usufruct over a sum of money was provided for. The ruling specifies what that departure freezes: the valuation date, not the amounts written in the deed.
A third in the deed is not necessarily a third in value. The court of appeal reasoned on the deed’s figures: each child having received a third, no reserve was encroached upon. If one lot was undervalued more than the others, that equality no longer holds in real value; and the value of the lots also weighs on the calculation pool, the disposable portion and the imputation of the other gifts. The report therefore shows whether the undervaluation affects all the lots in the same proportion or favours one.
A retrospective assignment. The ruling speaks of real value; the valuer measures it as the market value (valeur vénale) of each asset at the date of the deed, the price it would have fetched in its condition at the time (market value within the meaning of EVS 1). The valuer reconstructs that condition from the deed, plans and permits, applies the planning rules then in force and compares the asset with sales from the same period in the same area. For an old deed, the report explains how the references were chosen and, where needed, adjusted over time.
Related questions, distinct rules. The ruling of 22 June 2016 on jointly owned and split-ownership property valued without discount decides another question: the absence of any discount for joint or split ownership on estate buildings valued between co-partitioners for the partition. The valuation date, for its part, changes when the deed loses its characterisation: the article on the gift partition requalified as a simple gift deals with a deed allotting undivided shares, whose assets are brought back into the estate (rapport) at their value at the date of the partition.
What the report delivers. For each lot: the assets, their condition at the date of the deed, the stated value, the real value at that date as a range and a point figure, with its references, and the gap. The notaire (French civil-law notary) or the judge then redoes the imputation and the computation of the reserve on that basis; assessing the conditions of article 1078 and any contrary agreement is for them.
What the valuer takes from it
- For the computation of the reserve, a gift partition freezes the valuation date, the date of the deed, not the amounts written in it.
- The gifted assets are assessed at their real value at the date of the gift partition, even where the heirs accepted the deed’s valuations.
- The valuer reconstructs the condition of each asset at the date of the deed and compares it with sales from the same period, in the same area.
- The report sets out, lot by lot, the stated value and the real value, so that the apparent equality of the lots can be checked.
Further reading
The Market value page describes the assignment, its timescale and its fee. The guide Lifetime gift partition: valuing the lots between children and the glossary entries réserve héréditaire, réduction des libéralités and date de valeur complement this article. The ruling of 22 June 2016 is discussed in French estate partition: no discount for joint or split ownership. On the same theme: Gift partition with undivided shares: it is a simple gift and Reduction indemnity: value at partition, not at the opening. The decision is available on Légifrance.
What next
A gift partition whose values seem far from the market of the time, and a reserved share to compute?
I reconstruct the real value of each lot at the date of the gift partition, from the condition of the assets at that date and sales from the same period. The report allows the notary, the heirs or the court to redo the reserve computation on supported values.
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