Full community of marital property regime: what are the consequences on the death of a spouse who holds securities?
On the death of a spouse, the question arises concerning the framework within which their securities are transferred to the surviving spouse.
The presentation of this dispute draws attention to the rules governing the matrimonial regime of full community of property with a full transfer of ownership clause, and its significant effects on the conditions of ownership of financial securities by the surviving spouse.
Mrs M. told me that her husband held a personal equity savings plan (PEA: Plan d’Epargne en Actions) and an ordinary securities account. Her husband was suffering from a disease in the terminal phase and had asked her, on 3 October 2019, to sell all his equities in light of the situation and since Mrs M. had little knowledge of financial matters.
On 7 October 2019, Mr M. died from the sequels of his disease.
Mrs M. told me that on 12 October 2019, as he had wished, she contacted the account-keeper in order to place a sell order for all the securities registered on her husband's PEA plan and ordinary securities account. She specified that, under a marriage contract, she was married under the full community of property regime with a full transfer of ownership clause.
When the sell orders were transmitted by telephone, the adviser did not inform her of any impediment to their execution.
However, it became apparent that the sell orders were not executed by the account-keeper, while the value of the PEA plan and the ordinary securities account fell sharply as a consequence of the Covid-19 epidemic.
After numerous reminders, Mrs M.'s adviser told her that for the sale of securities to be executed, the institution had to receive the succession documents that must be provided by the notary.
Mrs M. made a complaint.
On 22 and 23 June 2020, in response to her request, the account-keeper proposed to her to execute the sale of all the securities and pay her the amount of €3,000 as a commercial gesture.
Mrs M. considered that the sell orders ought to have been executed at the time when they were given, i.e. on 12 October 2019. She told me that the fall in value of the securities since the date on which the order was given to sell all the portfolios exceeded the proposed compensation.
It was in these circumstances that Mrs M. consulted me.
I questioned the account-keeper and asked it to inform me of its observations. And as part of this request for observations I drew its attention to the matrimonial regime under which the spouses were united, namely the full community of property regime with full transfer of ownership to the survivor.
In reply to my request, the account-keeper said that after being informed on 13 January 2020 of the death of Mr M., his dossier was transferred to their succession department for processing.
It also specified to me that on the death of its holder, a PEA plan cannot be transferred to the nominated beneficiary, since the regulations require that it be closed. The account-keeper said that it was therefore impossible for it to execute the instructions before finalisation of the transfer of the PEA plan to the succession account.
It explained to me that their succession department finalised both the transfer of the securities to the succession account and the closing of Mr M.'s accounts on 5 March 2020.
It said that subsequently, on 22 and 23 June last, an adviser contacted Mrs M. to propose €3,000 to her as a commercial gesture, and to ask her if she wanted to sell the securities received, a proposal that she refused in light of the performance of financial markets and given the specific circumstances.
However, given her matrimonial regime, the account-keeper recognised, during the mediation, that the succession ought not to have been opened. That is why it agreed to accede to Mrs M.'s demand that the share prices on 12 October 2019 be taken as reference for the securities for which the sale had been requested. This proposal included a condition precedent that the assets be sold as soon as possible.
I considered that the solution presented for mediation by the account-keeper was now fair and should compensate precisely for the prejudice sustained by Mrs M. due to the sale of the securities at a far later date than 12 October 2019.
Indeed, the account-keeper had to know the personal, financial and also the matrimonial situation of the spouses to be able to provide a personalised response to its clients' needs concerning their wealth.
The full community of property regime with full transfer of ownership specifically awards all the wealth to the surviving spouse without opening a succession.
Accordingly, after the closure of the PEA plan following the death of its holder, the contents of the portfolios were to be transferred entirely to Mrs M., without needing to open a succession.
Therefore, since the securities belonged to Mrs M. following the death of her husband, she could validly proceed to sell all the securities. And this order had to be executed on the day it was issued, i.e. 12 October 2019.
Lessons to be learned
Article 1387 of the French Civil Code, expressing the freedom of matrimonial arrangements, subject to respect for public order, allows for a large number of possible regimes, and notably the full community of property regime.
Under the full community of property regime, all the property, present and future, owned by the spouses is pooled, irrespective of its date of acquisition (before or after the marriage), origin (purchase, gift, etc.) or method of financing.
Accordingly, being also conceived as a particular stipulation derogating from the legal regime, the full community of property regime with full transfer of ownership clause ensures the future of the surviving spouse by awarding them all the conjugal wealth.
Thus, the community of property is awarded to the surviving spouse without having to perform any formalities. The death of one of the spouses does not result in the opening of a succession and hence the need to perform all the formalities inherent in a succession. As a consequence, the surviving spouse will be the full owner of the wealth left by the deceased. The children will receive their share only upon the second death.
It should be specified that this is the case only if a full transfer of ownership clause has been included in the marriage contract. Otherwise, only half of the common property is received by the surviving spouse. The balance is received by the heirs, including the surviving spouse, within a joint ownership framework.
 In accordance with the Reply of the French Ministry of the Economy, Industry and Employment published in the Official Journal of the Senate on 18.02.2010 on page 380, the death of the holder of a "PEA" personal equity savings plan entails the closure of the plan. This was the subject of a special report in March 2020. https://www.amf-france.org/en/amf-ombudsman/ombudsman-online-diary/latest/pea-personal-equity-savings-plan-must-be-closed-holders-death-its-closing-not-equivalent-liquidation
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Head of publications: The Executive Director of AMF Communication Directorate. Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02