5th March 2022
By Thomas Marron, Partner
06 14 24 61 29
thomas.marron@blevinsfranks.com
Succession: frequently asked questions
Living in France offers many benefits, but there are some drawbacks, such as having to navigate France’s complex and old-fashioned succession regime. Here we look at some of the frequent questions we are asked about estate planning in France.
As UK national living in France, should I have a UK Will or a French one?
It’s often beneficial to have two wills – one for your assets in France and a UK one for British-based assets. These should align and cross-reference each other to avoid conflict.
A UK will can be effective in France, but after going through the UK probate process it needs to be translated and notarised before obtaining probate here, so separate wills can prevent delays and expense for your heirs.
Your will should follow French succession law, or officially opt for UK succession law to apply to your estate.
How much French inheritance tax will my children pay?
Each child benefits from a €100,000 tax free allowance. The tax rates start at 5% (for inheritances up to €8,072) but rise progressively to 45% (for the excess above €1,805,677).
Step-children, however, generally pay tax at 60% with virtually no allowance. This could potentially apply to your own children – if you leave assets to a spouse who is not their natural parent, who then leaves the assets to your children, they are treated as her step-children and taxed accordingly.
I don’t have children and plan to divide my estate between by sister, nephew and godchild. What tax will they pay?
The tax rates can be eye-watering: generally speaking, it’s 35% or 45% for your sister (with a €15,932 allowance); 55% for your nephew (€7,969 allowance) and 60% for your godchild (€1,594 allowance).
Can I bypass succession tax by giving assets away while I’m still alive?
You can give away set amounts tax free, but above this gifts are taxable and the exemptions only renew every 15 years.
I own our house entirely in my name. I want to gift half to my wife, but will she pay tax on the transfer?
While inheritances between spouses are tax free, gifts are not. Anything above €80,724 is taxable. You also need to follow French succession law, since children are ‘reserved heirs’.
Why can’t I leave all my assets to my spouse?
Under French succession law (the default position unless you make other arrangements), inheritances must pass down the bloodline. Children are protected heirs and must inherit between 50% and 75% of your estate. You can only leave the ‘freely disposable’ part to your spouse/PACS (civil) partner.
My partner and I have no wish to get married. What happens when one of us dies?
If you are not in a PACs (civil partnership) either, you’ll pay the highest rate of inheritance tax – 60%.
Can I bypass French succession law?
You can use the EU succession regulation ‘Brussels IV’ to opt for the succession law of your country of nationality to apply on your death instead French law. You must opt for this in your will.
Be careful though and establish how it affects your family. For example, you could risk unknowingly making your worldwide estate liable to UK inheritance tax.
Note also that children who were not left the share of French assets that they are entitled to under French law can now challenge the will and seek compensation. This would apply if you or your children are EU residents and the succession law you opted for does not apply forced heirship – as is the case in England and Wales. However, they can only claim on French assets.
Remember that if you leave assets to people besides a spouse or descendants, they’ll face huge tax bills.
There may be other ways to leave assets to your chosen beneficiaries. For example, inserting an ‘en tontine’ clause into the conveyance at the time of buying a property ensures it will pass to the surviving tontine holder. France’s different types of marriage contracts can also affect how assets are owned. But they may have tax consequences, especially for more complex families, so take advice.
Do the same succession rules apply to capital investments?
Yes, generally speaking both succession tax and law apply. However, it is easier to avoid these than with real estate.
A widely used solution is to hold investment assets within an assurance-vie. These policies can considerably mitigate succession tax and are exempt from succession law, passing automatically to the nominated beneficiaries. Normally a savings vehicle, they are a great source of beneficially taxed income – but also fantastic succession planning structures.
The French succession regime is very detailed and complex, so I can only touch on some issues here in very general terms. You must do sufficient research but also take professional, specialist advice to ensure you get it right and your wishes for your heirs are fulfilled.
BLEVINS FRANKS SEMINARS
Saint-Cyprien | 15 March
Carcassonne | Wed 16 March
Marseillan | Thu 17 March
Life after Brexit for UK nationals living in France
The last two years have been challenging with Brexit and the pandemic. Has your financial planning kept up with developments? Our seminars will focus on:
• What changed with Brexit
• Succession reform in France
• Taxation in France
• Tax and estate planning solutions
• Investing today
Book your place online today
It is important to seek personalised, professional advice on financial matters. For questions about completing your tax return, speak to a tax accountant. For advice on effective tax planning in France, to lower liabilities on savings, investments and pensions, speak to a cross-border tax and wealth management specialist like Blevins Franks. 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.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website.
Blevins Franks accepts no liability for any loss resulting from any action or inaction or omission as a result of reading this article, which is general in nature and not specific to your circumstances.
BLEVINS FRANKS BREXIT UPDATE
Now that the UK has fully left the EU, Blevins Franks’ latest Brexit video explores:
- The 90-day rule for visitors and holiday homeowners
- The new rules for UK nationals relocating to Europe, particularly retired people
- Some of the residency and freedom of movement permits available in Europe
- Form S1 route for subsidised healthcare coverage
And more….
https://www.youtube.com/watch?app=desktop&v=P0cW7T6S8r8&feature=youtu.be
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