L’Oreal heiress Liliane Bettencourt, 88, is to be placed under the guardianship of family members, the lawyer of her estranged daughter Francoise Bettencourt-Meyers said yesterday after a court hearing.

Billionaire Ms Bettencourt, whose mental health is reportedly declining, will be placed under a grandson’s guardianship and her wealth and property under that of her daughter Francoise and two grandsons, Charlotte Robbe-Phan said.

Ms Bettencourt is on L’Oreal’s board of directors but since family members are to be her guardians the court’s decision should have little impact on the running of the cosmetics giant.

Her lawyer Jean-Rene Farthouat said he would appeal the court’s ruling, which remained in place pending the appeal process.

The Bettencourt mother and daughter have been at the centre of a very public feud over the fate of France’s third-largest family fortune.

The website of newspaper Le Monde yesterday quoted a medical report for use by the court as saying that Ms Bettencourt was suffering from “mixed dementia” and “moderately severe” Alzheimer’s disease. The report said Ms Bettencourt “presents with Alzheimer’s disease at a moderately severe level with a possible vascular participation” and that she is in the midst of a “slow and progressive process of cerebral degeneration”.

Ms Bettencourt-Meyers has argued that her mother is mentally unfit to manage her estimated €16 billion fortune.

In an interview published in Sunday’s Journal du Dimanche, Ms Bettencourt threatened to leave France if her daughter manages to place her under her guardianship.

“If it’s that, I will go abroad. If my daughter looks after me I would feel stifled. If it’s her, I will leave,” she said.

Ms Bettencourt-Meyers has alleged that people close to her mother, including celebrity photographer Francois-Marie Banier, took advantage of the heiress.

Ms Banier was Ms Bettencourt’s sole named beneficiary in a will drawn up in December 2007. But Ms Bettencourt broke with Ms Banier earlier this year, cutting him out of her will and depriving him of an estimated €1.25 billion.

Mother and daughter have been involved in legal battles for three years.