Some points relative to inheritance tax, succession and property in France

• French real estate is always governed by French law regardless of nationality, residence or place of death of owner(s

• In French law, unlike in the UK, you do not have the freedom to choose to whom and how much you leave your French property and assets to. There are laws which stipulates how much and to whom a certain proportions of the estate must be left. If there was;

1 child, it is 1/2

2 children, it is 1/3 each

3 children, it is 1/4 each(or share of this if there are more children)

0 children, it is the immediate family, parents and grand parents who may qualify

• Spouses themselves have no inheritance rights in French law, under the laws of succession, inheritance rights always follow the blood line. If a couple changed their marriage contract to a ‘communaute universelle avec attribution de la communate conjoint au survivant’ (universal community) this situation can be avoided, or delayed until the death of the surviving spouse


• Following the death of one of the married couple, the spouse has a 76.000e tax free allowance, and a general 50.000e allowance. Each child has a 50.000e allowance. Once all the allowances are used up French inheritance tax becomes applicable on a sliding scale of between 5% and 40%

• For unmarried couples the allowance is 1.500e and the tax rate is currently 60%

• If you own any property in France, whether or not you are resident in France, it is recommended that you also have a French will. This will ensure that your wishes are taken into consideration and may avoid a costly legal wrangle should you and your spouse die together

• If you have a UK and French will, care should be taken to ensure that neither revokes the other, it is probably simpler to have the wills relate only to the property in the respective countries

The official French government website outlines that there are two types of marriage regimes available under French law

1. The standard regime, (regime de la communaute reduite aux acquets) which is applied to all couples getting married, or who have been married elsewhere and then come to live in France. If they are happy with this regime there are no further steps to take

2. A non standard regime, which involves the couple drawing up a marriage contract, this has to be completed before a notaire

There are four types of marriage contracts to choose from, which have a direct bearing on the options available in terms of bequeathing property and the inheritance tax implications. These are;

1. Community property with specified modifications

2. Universal community

3. The separation of goods

4. Share in the goods obtained during the marriage

Although it is possible to modify the contracts in almost anyway you wish to, in general terms the following outline the differences between the types of contract

1. The couple can draw up a contract which modifies the standard marriage regime. This allows the insertion of clauses which, for example, allows the surviving spouse to inherit everything

2. The couple draw up a contract whereby everything they currently own, or will come to own during the course of their marriage is owned equally between them. (there are a couple of exceptions, personal clothing, work tools, etc)

3. Each one of the couple retains the full ownership and administrative rights of their personal possessions. In the absence of contrary clauses, each will be expected to contribute to the ‘expenditure’ in their marriage relative to their personal resources

4. During the marriage this functions as if the couple had opted for contract number three (separation of goods). At the point of the marriage being dissolved the person with less possessions/wealth has the right to claim up to half the difference in the value of the possessions/wealth acquired during the marriage, from the other party

Which marriage regime or contract a couple opt for depends very much on their personal circumstances. In all cases I would urge that competent legal advice is sought prior to making any changes to either regime or contract

• Any change to the marital regime or contract cannot be altered for at least two years

• All of the contracts can be agreed so that full ownership can be passed to the surviving party. Any other interests in the property, such as those of reserved heirs, would be deferred until the demise of the surviving party

• If the value of the assets is high, the likelihood is that a large amount of inheritance tax will be payable on the death of one or other of the couple

• If the couple have children, they may want to ensure that the surviving spouse has security of being able to remain in the marital home, and cannot be forced to vacate or sell it

• If the surviving spouse wished to sell the property (to move to a smaller place or avoid painful memories. etc) the wrong choice of contract may mean that they are unable to do this without the consent of ‘reserved heirs’

• If you have assets outside of France, you may wish to have the contract related only to your assets within France

• If either of the couple have children from another relationship, usually their consent would be required before any changes can be made to the marriage contract or regime

• Unless the change to a ‘universal community’ contract is carefully crafted, children not common to both parents can challenge it and have it reverted to ‘separation of goods’ (action en retrenchment), to ensure they also inherit the share due under French law

• If you opt for either 1 or 2 (the community contracts), it is likely that the heir(s) will pay higher taxes on the death of the surviving spouse as they will inherit a higher value in one go

• If you opt for a community contract and the property goes to the surviving spouse, then if the surviving spouse remarried under a community contract and died first in the new marriage, then the children from the first marriage would be disinherited

• If you opt for 3 or 4 (separation of goods), although the surviving spouse retains the right to enjoy the property for the rest of their life, they would need the agreement of all the reserved heirs should they wish to sell the property. If any of the children are below 18 years of age, you would not be able to sell without first going to court to obtain permission. If any one of the heirs did not agree to the sale, you would not be able to sell the property. If this situation continued for five years then you would be able to go to court to apply for permission to sell

• If whilst changing marital contract, you also change property ownership from single name to joint ownership there is a stamp duty of almost 5% to pay

• As this is a complex area of law, and potentially a financial and emotional minefield, it is recommended in all cases to consult a competent legal adviser

To date I have been through one change of marriage contract and regime. This involved a retired British couple who were keen to minimise the immediate potential stress and financial costs to each other should one of them die

Following independent legal advice taking into consideration, their wishes, financial assets, potential allowances, for spouse and children, the couple opted for a ‘universal community’ contract. (They have decided to keep the assets they possess outside of France out of this agreement, these assets will be governed under UK laws)

The couple have drawn up French and UK wills related to their wishes and property in the respective countries, being careful that one does not invalidate the other

Some of the realities are different from the general information that is often found within official and non official information. For example the children were entitled to a 62.500e allowance rather that the 50.000e. The surviving spouse was entitled to 76.000e allowance as there were children ( if there are no children the spouse would entitled 125.000e allowance)

This involved the notaire’s fee and a 1% property transfer tax. The transfer tax is based on the current estimated value of the property and is payable at the signing of the contract. The property value was worked out by the notaire based on the purchase price, any extensions or improvements and then adding 7.5% for each year of ownership to reflect rising property values

There were two visits to the notaire

1. The first appointment was to discuss the options, open to them and to then decide the best option for them (they had already given this a good deal of consideration and taken legal advice). They were also able to hand over the documents that they had been requested to bring with them


2. A second appointment was held six weeks later to sign the marriage contract and changes to the property deeds. They were advised that their marriage contract was valid with immediate effect, although the papers would take another three to four months to arrive back in their hands. They also paid the required fees and taxes at this meeting

Marriage certificates

Birth certificates

Property deeds

Passports

(Divorce certificate, if previously divorced)

Although a great deal of time and attention has been taken to produce this guide, it is that, a guide for information purposes only. It does not claim to represent or replace legal advice

John Ewens is an Occupational Therapist registered to practice within the UK and France, he has extensive experience of health, disability and social care issues in both the UK and France. Contact him in complete confidence on issues concerning you within-france