By Mary Taylor, Partner, Blevins Franks
05 62 30 51 40
Have you made France your permanent home? It is essential to review your wealth management to ensure it is specifically designed around your new life in France. Besides considering how to achieve advantages for your lifetime, it is also essential to get your estate planning in order. Don’t risk leaving it too late.
Estate planning in France is particularly complex and challenging. Its “forced heirship” regime does not allow you to freely distribute your assets on death, and succession taxes can be as high as 60%. Arrangements that worked in the UK are unlikely to achieve the same results here and could have unexpected consequences.
French succession law protects your children above anyone else. This can be very restrictive and prevent you leaving all your wealth to your spouse, or leaving assets to other relatives, step-children, friends etc.
The 2015 EU succession regulation, “Brussels IV”, gives UK nationals the ability to opt through their will for UK law to apply to their assets on death, instead of French law. This potentially means you can leave assets to whomever you want.
While this seems good news, there is more to it than first meets the eye and it is not necessary the best route for UK nationals.
It is still obligatory for a French notaire to handle your estate, and in this case he will have to administer it under a law he is not experienced with. The UK has opted out of Brussels IV, and so there is uncertainty over how the rules will be interpreted. Adopting UK law could negatively affect your existing succession planning arrangements, and may also mean that your estate becomes liable to UK inheritance tax as well as French succession tax.
You therefore need to have all the facts and consider your options carefully. There may well be options available under French law that achieve your aims, and without complicating matters.
Whichever law you opt for, French succession tax continues to present a significant hurdle.
Spouses/PACs partners are exempt from this tax, and children receive a €100,000 allowance each, with tax rates up to 45%. For everyone else the tax rates get higher and the allowances much, much lower. If, for example, you pass assets to stepchildren, they pay tax at 60% and only get a €1,594 allowance.
Again, there are structures you can use here in France that can provide significant succession tax planning benefits. You should look to accomplish tax advantages for yourself at the same time. Make sure the structures you use achieve what you wish, in the way that you wish. While some arrangements may appear similar to each other, small differences can have big implications.
Estate planning in France is a very specialist area and it is essential to take professional advice from an experienced wealth manager.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.