Navigating civil law constructs in common law jurisdictions: why make it easy when complexity is an option?

A report on a panel session, part of the 31st Annual International Private Client Tax Conference, titled ‘Navigating civil law constructs in common law jurisdictions. Why make it easy when complexity is an option?’ held on 2 March 2026

Session Co-Chairs

Iskra Doukova  Macfarlanes, London

Dirk-Jan Maasland  Loyens & Loeff, Amsterdam

Panellists

Michaël Khayat  Arkwood, Paris

Shawntel Randi  Nixon Peabody, Boston

Nicola Saccardo  Charles Russell Speechlys, Milan and London

Rahul Sharma  Fasken, Toronto

Reporter 

Ewelina Wasowska  99 Avocats Associés, Monaco

Introduction

Cross-border estate planning is increasingly defined by the interaction between civil law concepts and common law frameworks. While continental systems rely on mechanisms, such as usufruct, bare ownership, successive usufruct, fidei-commissum, fiduciary administration (bewind) and private foundations, common law jurisdictions typically approach similar objectives through the use of trusts, equitable interests or contractual arrangements.

The result is not merely technical divergence, but a fundamental difference in legal reasoning.

As one speaker succinctly put it during the session, ‘this stuff is complicated.’

The session ‘Navigating civil law constructs in common law jurisdictions. Why make it easy when complexity is an option?’, held at the 31st Annual International Private Client Tax Conference, explored precisely how this complexity manifests in practice in terms of the applicable legal classification, inheritance and tax treatment.

The panel brought together an international group of practitioners, whose comparative perspectives (French/Italian/Dutch/Liechtenstein civil law, English/US federal and state common law and Canadian mixed civil/common law) shaped a highly practical discussion.

Beyond the technical analysis, a recurring theme emerged: effective cross-border structuring requires not only legal expertise, but also the ability to ‘present a good recipe, so they can properly bake the cake.’

Panel discussion

Diverging legal logics: ownership versus economic reality

A central issue discussed during the panel session was the mismatch between civil law and common law approaches to ownership.

Civil law systems recognise usufruct as a real right, allowing ownership to be split between the right to use and enjoy an asset and the underlying title.

Common law jurisdictions, however, do not recognise usufruct as such. Instead, they tend to analyse arrangements through the lens of economic substance, focusing on control, benefit and risk allocation.

This divergence creates immediate challenges in cross-border contexts.

A structure that is clear and well-established in a civil law jurisdiction may become ambiguous when assessed under common law principles. Tax authorities and courts may recharacterise the arrangement based on who effectively controls the asset or derives its economic benefit.

In practice, this means that the same ‘recipe’ may produce very different outcomes depending on where the cake is ‘baked’.

This divergence may lead not only to legal uncertainty, but also to double taxation or unintended tax exposure where jurisdictions adopt conflicting characterisations of the same structure.

Usufruct and bare ownership in cross-border planning

The panel devoted significant attention to usufruct structures, given their widespread use in civil law jurisdictions.

These structures are particularly effective for intergenerational planning, allowing one generation to retain the economic benefit of assets, while transferring the underlying ownership to the next generation.

From a civil law perspective, the mechanics are straightforward. However, when analysed in a common law environment, several uncertainties arise in regard to:

• how the rights should be characterised;
• who is considered the beneficial owner; and
• how the structure should be taxed.

From a tax perspective, the panel noted that the creation of a usufruct structure may trigger gift tax on the bare ownership, while not necessarily giving rise to capital gains taxation, and that the extinction of the usufruct upon death is generally not treated as a taxable event in certain jurisdictions.

The valuation of usufruct and bare ownership, often determined by age-based tables, was also highlighted as a critical factor, with significant differences between jurisdictions, such as France and Italy.

These uncertainties can have material consequences, particularly where multiple jurisdictions assert taxing rights over the same structure.

The panel illustrated these issues through a series of cross-border scenarios involving Europe, the United Kingdom and the United States.

One example involved a structure combining:

• French forced heirship rules;
• UK inheritance tax exposure; and
• US tax considerations for the beneficiaries.

In such situations, a usufruct/bare ownership split can offer a workable solution. However, its effectiveness depends on how each jurisdiction interprets the structure.

Another example highlighted the use of post-death restructuring (variation of a will) to adapt a civil law structure to a common law framework, particularly through the introduction of trust elements.

These examples underscored a key point: cross-border estate planning is rarely about applying a single legal concept, but rather about aligning multiple legal systems.

The discussion also extended to alternative civil law mechanisms, such as fidei-commissum arrangements, fiduciary administration and private foundations, which can serve similar purposes to trusts but raise additional classification challenges in common law jurisdictions.

Coordination as a necessity, not an option

A recurring theme throughout the panel session was the importance of coordination between advisers across jurisdictions.

Cross-border structures cannot be designed in isolation. Instead, they require a coordinated approach that takes into account:

• the legal classification;
• tax treatment; and
• succession constraints.

As one speaker emphasised, ‘we need to tackle it – but tackle it together.’

This collaborative dimension is essential to ensure that a structure functions coherently across jurisdictions, rather than producing unintended consequences.

The case for simplicity

Despite the technical sophistication of the structures discussed, the panel consistently returned to a fundamental principle: simplicity remains a key success factor.

Overly complex structures may offer theoretical advantages, but they also increase the risk of misinterpretation, administrative difficulties and tax uncertainty.

As one speaker put it: ‘Let’s keep it as simple as possible.’

This approach reflects a broader practical insight: in cross-border planning, complexity is often not the solution but the problem.

Practical implications for advisers

For practitioners, the session highlighted several key takeaways, as follows:

• legal concepts must be analysed functionally, not just formally;
• cross-border structures require multijurisdictional coordination;
• forced heirship and local rules remain critical constraints; and
• simplicity should be prioritised wherever possible.

Ultimately, effective structuring depends on the ability to translate legal concepts across different systems, while preserving their intended economic outcome.

In practice, this also means that advisers in common law jurisdictions must be able to translate civil law concepts into clear and operational guidance for accountants, who ultimately implement the structure in tax filings. Providing the right ‘recipe’ is, therefore, essential to ensure that the intended outcome is correctly ‘baked’ in practice.

Conclusion

The session provided a clear illustration of the challenges that arise when civil law estate planning tools are used in common law environments.

While concepts such as usufruct, fiduciary administration and foundations remain powerful tools, their cross-border application requires careful analysis and coordination.

The metaphor of the ‘recipe’ is particularly apt: legal structures must not only be well designed, but also clearly explained and consistently implemented across jurisdictions.

As international wealth structures continue to grow in complexity, the ability to translate, simplify and coordinate legal concepts across borders will remain a defining skill for private client practitioners.