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buying unmarried


gert
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hello, i seem to be using this forum a lot lately and i am certainly glad it exists!!

my next question is...........is there anyone out there who has bought property as an unmarried couple, perhaps with children,( i have three 2,4 & 6) and what did you find the best method of purchase with regard to sci`s, en tontine, en division etc....want to keep it as simple as possible ( a bit like me really!) and although i`ve been told sci`s are a good idea don`t really want to be employing an accountant each year and paying big start up costs ( need the money for renovation, don`t have much of it ! ) is there a simpler way to avoid inheritance tax etc. ( yes i know i could take legal advice on this but want to know what others have done in the same position first ) this is for a primary residence in france not a second home.

many thanks for any advice from those who have been through it. 

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[quote]hello, i seem to be using this forum a lot lately and i am certainly glad it exists!! my next question is...........is there anyone out there who has bought property as an unmarried couple, perhaps w...[/quote]

Having been there, we found that the easiest (and cheapest!) solution was to get married.....

For all the right reasons, of course!!

 

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hi nick

yes am considering that too! i appreciate it`s the best solution at the end of the day.

is there a quick way of getting married in france or is it a registry job in the uk?

left this issue far too late really as i`m on the brink of buying something, would it be too late to marry between signing the compromis de vente and the acte de vente?

otherwise i think the only solution will be a PAC`S agreement with an en tontine clause?

 

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[quote]hi nick yes am considering that too! i appreciate it`s the best solution at the end of the day. is there a quick way of getting married in france or is it a registry job in the uk? left this issue ...[/quote]

14 days in the registry office in the UK....

& yes, between signings will do!

For all the rights reasons, of course!!

 

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The only safe way to avoid your partner being left out in the cold is to put a large percentage of the property in her name, say 30% for you and 70% for her!

Otherwise, should you be deceased, the three children would inherit the bulk of the property plus and any monies in the bank!

This is a legal process called Usafruit. It should be done on the purchase of the property! When you see your Notaire it is imperative that you investigate this situation thoroughly!

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hi , thanks for the reply, i`ve read and heard some stuff about this usafruit but what if she dies rather than me with 70% in her name?, do the kids still get the majority? or do i get the majority? what would happen with the kids share anyway, the oldest is 6 years old! does the remaining partner have to wait until they are all 18 to make a decision?
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[quote]The only safe way to avoid your partner being left out in the cold is to put a large percentage of the property in her name, say 30% for you and 70% for her!Otherwise, should you be deceased, the thre...[/quote]

If someone tried this with me - married or just long term partners I would give them very short shrift. In a real relationship everything should be 50/50. You either work as a partnership or it does not work - I have seen what splitting up property into uneven chunks like this can do.

We are en Tontine - but it was ideal for our married status - three children each.

We seem to have a 'Dog and Duck' situation here - get proper legal advice - as well as getting married

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"For all the right reasons, of course!!"

Financial security for a loved one is as good a reason as any.

My knowledge of French inheritance law is limited to what I have read, mostly on this forum, without much practical experience. It appears that these laws were framed in a time when marriage between man and woman was the norm (and children and they do not reflect today's practices. As the French seem to be slow to change perhaps the only sensible answer is to follow their rules. Playing this proposed percentage game is risky unless you can guarantee that the 2 of you die in the correct order.

John

not

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Well I didn't think that usufruit worked like that.

We have done the usufruit, which as far as I am aware give the right to use the property or live in the property, not 'inherit' per se. The taxes I feel sure would be treat as per normal ie the kids would have their liability as well as the surviving spouse.

Also if one separates, I don't believe that the usufruit would come into play, the 70% would be the bit that stuffed the other one.

Legal advice from several sources, as always, would seem necessary before deciding. And, as always, I would not be 'unmarried' in France if in a permanent relationship.

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Hi

We had the same problem and have had good advice from Victoria Headdon at www.headdonconsulting.com. they also have a great forum.

We were both married before and have children so......very briefly without going into all the nitty gritty we were advised to buy endivision with a usefruit using a Tontine clause.

I hope this is of help to you.

Bon chance

Geri and Brian
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Hi

We had the same problem and have had good advice from Victoria Headdon at www.headdonconsulting.com. they also have a great forum.

We were both married before and have children so......very briefly without going into all the nitty gritty we were advised to buy endivision with a usefruit using a Tontine clause.

I hope this is of help to you.

Bon chance

Geri and Brian
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Well !

It all depends on your EXACT situation now AND your precise wishes for the future.

We had highly specific requirements and we found a solution. Our Notaire was not aware of this solution!! You need to balance Inheritance tax with succession laws. You need to decide to whom you wish the property to go on the death of the first and on the death of the second.

You need to decide NOW what will happen to the survivor on the death of the first and relate their ability to be able to pay taxes OR do you wish ONLY that they have the use of the property.

Tax IS payable on usufruit but only if GIFTED on death and it is on a sliding scale related to your age. However if usufruit is dealt with at the time of purchase, when each buys a percentage of the property AND a percentage of the usufruit crossed between each other, then either less or no tax is payable.

I see errors in the comments above and I believe that these errors are caused by assuming that situation "A" is the same a situation "B". There are many, many, many variables.

At one stage I was asked to go to my local (UK) police station and ask them to provide the Notaire with a letter stating how many years I had been separated!!

At first it all seems SO complicated but it is all logical and clearly defined in law, accessible on the Net. It will all fall into place if you study a little.

As Geri said above Victoria Headdon has been most helpful.

Regards

Brian and Geri
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I understood you couldn't leave a usufruit to a spouse when there are children from a previous marriage as French inheritance law considers that children from a first marriage shouldn't have to wait for their inheritance until a spouse from a second marriage dies. 

Also, the messages here seem to imply that there is a difference between how men and women's share is treated.  I understand that if the woman owns half of the property then her half goes to her heirs just as the man's half does - they can each leave their spouse only a specified portion of their immovable property (with usufruit if there are no children from a prior marriage) and the rest must go to the usual reserved heirs.  Money in the bank can be left where you like - the reserved heirs only come into it when you're talking 'immovable property'.

If you buy en tontine when there are children from a previous marriage, then the children of the spouse who dies first can effectively be disinherited because the property is deemed to belong to the surviving spouse as if the first had never existed - so the children of the first to die are no longer reserved heirs.  This is why notaire's don't like doing this: the French don't like disinheriting heirs in the blood line.  However, even if the surviving spouse then leaves the property in their will to all the children from both previous marriages, this is not good because the children of the first to die are not blood relatives of the survivor and will therefore pay 60% inheritance tax on the inheritance with only a very small allowance.  Also, with en tontine it isn't good for the surviving spouse if the value of the property is more than a certain amount because he or she is treated as having inherited the whole property and therefore pays inheritance tax on the whole of the property value rather than on just half of it. 

I'm a bit confused about this mention of buying usufruit and en tontine together but vaguely remember that there is something to do with 'gifts' that can be done - but don't the same disinheritance and tax situations still exist?

I hope I haven't confused the issue!  Its best to get proper legal advice if you're not sure, obviously, but at the end of the day we decided that as we had three children between us (two mine, one hubby's) and we wanted them all to inherit equally and without being overburdened with inheritance taxes, we would buy in normal French way, in the proportions that would allow that to happen (ie a third to hubby and two thirds to me).  We've got life insurance in place that will allow the survivor to buy the kids out of their portion if it turns out that they want to do so.

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Just for clarification

It is ONLY the Usufruit which we purchase en tontine with the actual property being purchased en Division. We have been twice advised that the usufruit can most definitly be left to a spouse, or partner, to prevent them being turfed out by the children of the deceased who have inherited the property (naked property).

We both have children from previous marriages. Hence, on the death of the first, the property of the deceased passes to the children of that deceased but the usufruit remains with the survivor and NO TAX is payable by the suvivor on the usufruit since it has never been gifted - it was bought at the start en tontine.

Buying en tontine does indeed disinherit the children of the first to die. However, if only the usufruit is purchased in this way, the end result is that both sets of children receive their inheritance of the property on the death of each parent with all receiving the USE of the property only on the death of the second.

We also understand that no differentiation is made between male and female.

Again the caveat - Each case is different. Seek specific advice. Also remember that the law will probably be changed by the time you have to deal with inheritance so all our careful planning may be for nought

Brian and Geri

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With you - I didn't know (or had forgotten - its a lot to read up on and then remember it all later!) you could do that, but if I had known (which I may have once!) then I would probably have discounted this method because wouldn't it mean that the survivor wouldn't be free to do with the property as they wished?  ie the survivor could continue to live on the property and presumably benefit from any business being run from it but couldn't for instance sell up and start a different business or move to live somewhere else?  Also, it coudn't be sold at all if the children were still minors - or things may be complicated where the children were still minors and another parent (ie the ex) may have some say in what happened to their property.  Everyone's situation IS different and in our case I wouldn't want to necessarily carry on with any business which may be set up on at least one of our properties whereas my husband probably would (depending on age and current ability).  Hence our arrangements for the survivor to buy the kids out, if they wanted to....
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The tax implications of this would be an important consideration (would the value of this usufruit be more than the allowance for a spouse - and if the couple weren't married, it would be taxed at 60%) and I would also be surprised if this were allowed (even for British couples) when there were children from a previous marriage in existence........
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It's probably best now to end this thread because the solution is different for each person.

We bought as we did because it suited US. That way would not suit Debra and she bought in a way that best suited her. However ebra's way would not provide the solution that we wanted!

Debra is right to say that the survivor cannot dispose of the property without the consent of the majority of owners. A minor causes complications. We have no minors to deal with .... UNLESS one of the children should die and the grandchildren inherit. Hmmmmmmm

When you buy a property you buy the bricks and mortar (Nue propriete) AND you obtain (obviously) the use of that property (the usufruit). These are treated together in the vast majority of cases but we separated the way we bought each part. Hence we had a solution which suited us.

Should anyone feel in a similar situation please feel free to email us directly.

Brian and Geri

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Its alright saying the discussion can end as long as there is nothing left in the thread which may mislead people researching this subject later.  I've already researched all this once, and resolved my situation in my way - but even I am wondering about what I've done now because what you are saying disagrees with the advice I was given.  Anyone researching the subject anew could be confused in a similar way, so it is probably best to leave the thread open until the different circumstances are crystal clear.

I knew what the usufruit was (and now teamedup does too) and now I know that the other thing is everything but the usufruit - but I was very definitely under the impression that noone could either buy or will a usufruit to a current spouse when there are children from a previous marriage in existence, no matter what their marriage regime - unless all such children are adults and they sign an agreement giving up their rights as reserved heirs.  Since your children are adults then this could be why you could do this?  Am I right in believing you can't do this if the children are minors (ie in our case, 8, 8 and 6)?  Unless the offspring concerned are capable of signing away their rights, any attempt to disinherit them in this way (even if only temporarily, which willing or giving a usufruit effectively does) can be challenged later on by the offspring in court.

The statement below really concerns me because I feel it is really misleading.  En tontine means that upon the first death, the survivor owns whatever it is as if the other person never existed (hence the disinheriting the reserved heirs factor) but it is treated totally differently for inheritance tax purposes.  Yes, there will be no gift tax - but there will still be inheritance tax, which will be at a rate of 60% in the case of a couple who are not married - or for the survivor in any other en tontine buying partnership where the survivor is not a blood relative - and this inheritance tax will be on the whole value of whatever was bought with the en tontine clause - whether this be the naked property or the right of use.  So en tontine effectively worsens the inheritance tax position in any case where the value of the inheritance is higher than the survivors inheritance tax allowance.

NO TAX is payable by the suvivor on the usufruit since it has never been gifted - it was bought at the start en tontine

If I'm wrong on any of this I'd really like to know, since its quite likely that our two recent property purchases will not be our last in France, so if we've got it wrong this time we'd quite like to make sure we get it right next time!!

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I agree DebraA64 that this seems to be misleading.

What I do know is that even french people get into a right mess with this and brits can and do too in spite of taking legal advice.

Still don't understand about the buying the usufruit bit, this is what the Service public say

 

VOS DROITS ET DÉMARCHES : Famille

Qu'est-ce que l'usufruit et quels sont les droits et les obligations de l'usufruitier?


L'usufruit est le droit de jouir d'un bien dont un autre a la propriété, à charge d'en assurer sa conservation.  

Ce peut être : 

  • le droit d'habitation d'un immeuble, 

  • la perception des intérêts d'une somme d'argent, 

  • la récolte d'arbres fruitiers ou d'un terrain agricole. 

Le droit de propriété est ainsi divisé en deux : 

  • la nue-propriété entre les mains du propriétaire, 

  • l'usufruit au bénéfice de l'usufruitier. 



1- Dans quels cas peut-on être usufruitier ? 

En vertu de la loi :  

  • l'usufruit des parents sur les biens des enfants mineurs, 

  • les droits successoraux du conjoint survivant en usufruit en présence de descendants, frères, soeurs, neveux, ascendants. 

En fonction d'un contrat : il s'agit de la vente d'un droit d'usufruit ou de la donation d'un usufruit.  



2- Quels sont les droits de l'usufruitier ? 

Il s'agit du droit : 

  • d'usage et d'habitation, 

  • de percevoir les fruits du bien, objet de l'usufruit : récoltes (fruits naturels), intérêts d'une somme d'argent, loyers, arrérages d'une rente viagère (fruits civils). Il y a perception des fruits proportionnellement à la durée de l'usufruit. 

  • de se servir de la chose à charge de la rendre en fin d'usufruit en même quantité et qualité en respectant l'usage auquel la chose est destinée ; 

  • de donner à bail son droit d'usufruit, de le vendre ou le céder à titre gratuit ; 

  • de louer le bien, objet de l'usufruit (il convient de préciser qu'en matière de bail rural et de bail d'immeuble à usage industriel, commercial et artisanal, ce droit est soumis à l'accord du nu-propriétaire. A défaut d'accord du nu-propriétaire, l'usufruitier peut être autorisé par justice à passer seul cet acte) ; 

  • de jouissance du droit de servitude, de passage. 


A noter : l'usufruitier doit donner son autorisation pour vendre le bien sujet à usufruit, et le nu-propriétaire ne peut nuire aux droits de l'usufruitier.  



3- Quelles sont les obligations de l'usufruitier ? 

- Il prend la chose en l'état après avoir fait dresser un inventaire des meubles et un état des immeubles en présence du nu-propriétaire. 

- A la fin de l'usufruit, il ne peut réclamer aucune indemnité pour amélioration du bien. 

- Il est tenu aux réparations d'entretien (qui peuvent être assimilées aux réparations locatives dans le cadre d'un contrat de bail), les grosses réparations étant à la charge du nu-propriétaire. 

- Il est tenu des charges liées à la possession (qui peuvent être assimilées aux charges locatives). Ce peut être par exemple le paiement de la taxe d'habitation. 


Sachez que l'usufruit ne prend fin que :  

  • par la mort de l'usufruitier, 

  • par l'expiration du délai de l'usufruit s'il y a un terme convenu, 

  • par l'achat de la nue-propriété, 

  • par le non-usage pendant 30 ans, 

  • par la perte totale de la chose. 


 
 Textes de référence
articles 382, 578 à 624 et 767 du code civil

 

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