When gifts made to some children exceed what their parents could freely give away, an heir entitled to the reserved share (réserve héréditaire, the portion of the estate French law guarantees to children) may ask for them to be reduced (réduction des libéralités, abatement of gifts). But what does the indemnity measure: what that heir lacks to reach their reserved share, or what each gift received beyond the disposable portion (quotité disponible, the share a person may freely give away)? In a reported decision of 22 March 2017, the First Civil Chamber of the Cour de cassation (the French supreme court for civil matters) chose the second answer. For the valuer of the gifted assets, the report must make the excess of each gift readable.
The facts
Two spouses died, the husband on a date the published decision does not reproduce, the wife on 13 November 2010, leaving three children. Difficulties arose in the liquidation and partition of their estates. The Riom Court of Appeal, on 16 February 2016, ruled in particular on the reserved-share rights of one of the daughters in the face of the gifts received by her sister and her brother.
In the father’s estate, it retained gifts of €75,252.41 to the sister and €69,903.41 to the brother, for a total it put at €145,156.82. It set the assets after notional addition of the gifted assets (réunion fictive, that is, their value added by calculation to the existing assets) at €145,206.24, and the disposable portion, one quarter, at €36,301.56. The gifts exceeding the disposable portion, it set the reduction owed to the heir who had not received her reserved share at €36,301.56, one third of the overall reserve, and held that her sister owed her €20,132.09 and her brother €16,120.05, as a reduction indemnity.
In the mother’s estate, it retained gifts of €20,477.28 to the sister and €24,127.28 to the brother, for a total it put at €44,604.55, assets of €148,991.82 after notional addition and a disposable portion of one quarter, €37,247.96. It held that no reduction indemnity was due: the overall reserve being €111,743.86, one third per child, the assets allowed the heir to receive her reserved share, her sister and brother being beneficiaries of the disposable portion.
The decision
The Cour de cassation partly quashed the ruling (Cass. 1re civ., 22 March 2017, appeal no. 16-15.484, reported), under article 865 of the French Civil Code, in its wording prior to Law no. 2006-728 of 23 June 2006, for the father’s estate, and under articles 919-2 and 924 of the same code for the mother’s. The reasoning is identical in both cases: “the reduction indemnity for a preferential gift exceeding the disposable portion must be set at the excessive fraction of the reducible gift” (translated from the French), and the Court of Appeal, “which did not draw the legal consequences of its findings, breached the above-mentioned provisions”. The rule is thus applied under both the former and the current law of succession. A preferential gift (libéralité préciputaire) is one made outside the donee’s inheritance share (hors part successorale): it is charged to the disposable portion, and the excess is subject to reduction (article 919-2 of the Civil Code).
Two lines of reasoning are censured: measuring the indemnity by the heir’s reserve shortfall, in the first estate; refusing any reduction because the assets allowed her to receive her reserved share, in the second, whereas the figures retained showed gifts exceeding the disposable portion. The case was remitted, on those points, to the Lyon Court of Appeal, which is to rule again on the reduction indemnities in both estates.
What this changes for valuation
The indemnity starts from each gift, not from the claiming heir. The question is no longer what the heir lacks to reach her third of the reserve, but by how much each gift exceeds the disposable portion. In the father’s estate, the combined gifts exceeded the disposable portion by €108,855.26, by subtraction from the Court of Appeal’s total, whereas the indemnities set totalled €36,252.14. That is not, however, the sum the heir will receive: the liquidation and the partition will determine how the reduced fraction is shared among the reserved heirs, donees included.
A reduction even when the assets seem sufficient. In the mother’s estate, the gifts exceeded the disposable portion by €7,356.59, again by subtraction from the total retained. Assets sufficient to give the heir her reserved share did not dispense with drawing the consequences of that excess. The report therefore shows how each gift is charged to the disposable portion.
The value of the gifted assets drives the computation. The calculation pool of article 922 of the Civil Code combines the assets existing at death and the gifted assets, the latter according to their condition at the date of the gift and their value at the opening of the estate; the disposable portion is a fraction of it. In the father’s estate, the gifted assets made up almost all of the pool: their value determined both the disposable portion and the excess. The articles on gifted land valued as bare land and on an asset sold after death set out these rules; the valuer applies them with comparable sales from the same period.
Two dates, two questions. The 2017 decision says what the indemnity measures; more recent reported decisions say at what date to quantify it, without contradicting it. The reducible proportion is determined on the article 922 pool, valued at death; the indemnity is then computed on the value of the gifted assets at the time of partition or of their disposal (alienation) by the beneficiary (article 924-2 of the Civil Code). The decision of 4 November 2020, discussed in the article on the reduction indemnity computed at partition, retains partition under former article 868; where there is no joint ownership (indivision), hence no partition, the decision of 22 June 2022, presented in the article on the reduction indemnity without partition, retains the time of the indemnity’s liquidation or of the disposal of the assets. The valuer supplies the values at both dates.
One table per gift. Computing the reduction is for the liquidating notaire (French civil-law notary) and, in case of disagreement, the judge; the valuer provides supported values and a verifiable table: existing assets, gifts added back with their date, condition and value, pool, disposable portion, charging and excess of each gift. The deduction of a care obligation, a distinct point decided on 11 October 2017, is discussed in the article on the gift with a care obligation.
What the valuer takes from it
- The reduction indemnity for a preferential gift is the fraction of that gift exceeding the disposable portion, not the claimant’s reserve shortfall.
- Assets sufficient to give the reserved heir their share do not dispense with checking whether each gift fits within the disposable portion.
- The reducible proportion is determined on the pool valued at death; the indemnity is then quantified at partition or at the disposal of the assets by the beneficiary, or at its liquidation where there is no partition (article 924-2 and more recent decisions).
- The report presents one table per estate and per gift, each value being dated and supported by references.
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 réduction des libéralités, quotité disponible and réserve héréditaire complement this article. The other 2017 decision on reduction is discussed in Gift with a care obligation: net benefit in the reserve estate. On the same theme: Reduction indemnity: value at partition, not at the opening and Reduction indemnity: without partition, valued at liquidation. The decision is available on Légifrance.
What next
Gifts that exceed the disposable portion, and a reduction indemnity to quantify?
I establish the value of the gifted assets, in their condition at the date of the gift and at the dates the computation requires, then present the calculation pool, the disposable portion and the excess of each gift, for the notaire, the heir or the court.
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