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Succession Law in France
2018-12-07 System Administrator 0 French Life Tax and Finance
Succession law is probably one of the most contentious rules for the British moving to France, as it seemingly infringes on our civil liberty to leave our money to whomsoever we please.
The idea in France is a Napoleonic one, that being that the family is protected and that money from the parents should filter down to their children. Children are deemed “reserved heirs” and so must inherit a certain fraction of their parent’s estate on their death. This law is entwined into the French constitution, thus these rules have significant importance and can be difficult to get round, though, of course, there are ways.
Succession law is especially problematic for those who have children from a former marriage, with the step parent being left to battle with their step children to hold onto house and home.
The amount of the estate to be left to the children is as follows:
1 child = one half of the estate
2 children = two thirds of the estate
3 children = or more three quarters of the estate
Obviously, the remaining fraction is unreserved and may be left to whoever the donor pleases.
To be clear, it is only that part of the deceased’s estate, thus if the deceased owned half the property and there was one child it would be half of the half, thus only a quarter. This clearly means that, in many cases, it does not give the child control of the property, but it is their right to demand their share on any sale.
However, for those that want the liberty to choose where their money goes there are solutions, but it involves some planning, ideally before buying any property in France, but it is never too late to take action.
It is usually possible to leave the surviving partner the right of use or “usufruit” of a property. The “usufruitier” can live in the property and make any alterations they wish. They may even rent out the property; however, on the sale of the property the children will generally have the right to their share.
This is probably the one area where we find that a little information is a dangerous thing. It is common where people copy each other’s solutions and this does not work as there is a different solution for every situation.
The worst action you can take is inaction. The only safety net for those who do nothing is the “right of living and right of use”. This literally means you have the right to use the property, with no rights to do anything to the property, or even rent it out, without the children’s agreement.
It is possible to reduce or even eliminate succession law issues, in many cases. This can be achieved using either legal or investment techniques or indeed a combination of the two.
This offers you an basic understanding of the French rules, however, there has been a change in European legislation which means that as Europeans and UK nationals, you have the option to simply opt out of French inheritance rules and request that UK rules apply to your assets, which can be achieved by merely amending your French Will to reflect your wishes. This law (EU 650/201) was passed in 4th July 2012 and came into effect 17th August 2015.
It is vital to understand that this law does nothing at all to avoid inheritance tax and this still needs to be planned for, as it will not help you avoid French inheritance tax rates of up to 60%.
The fact that this is such a complicated area, made worse by the international angle makes it imperative to get professional advice prior to taking any action.
The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. Kentingtons can accept no responsibility whatsoever for losses incurred by acting on the information on this page.
Article brought to you by Kentingtons Tax & Investment Consultants For more information please visit http://www.kentingtons.com/
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