Buying en Tontine, or similar

[Mrs Trellis]

When we bought our house 9 years ago a friend suggested we buy en Tontine so that if/when one of us dies the other will inherit automaticlly without having to involve our children.  We are buying another house and suddenly realise we haven't thought about the issue this time. Can we still do that?  Is it the best way?  There was an upper limit on house prices when buying en Tontine.

[nectarine]

yes you can and I'm not aware of an upper price limit. The tontine is a technicality whereby, when both of you are alive, actually no-one really owns the house until the death of one of you whereupon the survivor is deemed to have always owned the house. That's how it gets around the succession laws. Believe me, I've bought two houses and only recently checked this out again with a notaire - but you can ONLY have the tontine clause inserted at the time of the Acte De Vente ... not two days later or if you change your mind.

Whether the tontine suits you depends on your situation - if you both have children from separate relationships then the deceased's children would lose any rights on the house, since it would pass to the survivor and then automatically to their offspring. But it is legal, and suits many who - like us - want to ensure that the survivor has absolute control and rights and who aren't concerned if the children inherit or not.

[idun]

Nectarine, you are obviously not concerned about children inheriting, but I have always been led to believe that we cannot deliberately disinherit children in France. And that if we try, they can sue the estate for their 'rights'.

No matter where we were brought up, or our opinions on this, which in my case, have always left me very uneasy, I had to accept french ruling.

 

And yet I know that tontine exists. I was told that it should not be done where we lived as the properties were too expensive. So other implications which are tax implications may be  involved too.

 

I

[nectarine]

yes, tontine isn't to everyone's tastes, but if you are married then no inheritance tax will apply. However, if you are living as an unmarried couple, the survivor will be liable to inheritance taxes as they are applicable.

Disinheriting one's children, or stepchildren ... well that's a contentious subject, I know. But equally objectionable is that a couple could buy a home together and on the death of the first, some stepchildren could come and claim rights which force the eviction of the survivor!

The notaire that I saw recently - in order to clarify certain inheritance issues - was adamant that grown children cannot contest a tontine. The issue is different, however, if they are dependent in any way but that doesn't apply to us.

With regard to property price limits - I'm afraid I don't know about that. If there is a price limit then we're obviously not in that rich league!

[Boiling a frog]

Many years ago a Tontine was only any good if the value of the property was below approx 77000€.

This was because inheritance tax was payable ,even between husband and wife and that was the tax free limit.

Now there is no inheritance tax between husband and wife so there is no property price limits.

[Mrs Trellis]

Thanks folks.  I knew there was an upper limit at one time.  We are married 40 years and have children together, so should be straightford!

[Clarkkent]

I thought you might appreciate a comment from someone who bought en tontine and then suffered the loss of his spouse.

When my wife died (almost a decade ago) I asked the estate agent we had used for any help he might be able to give. He did so without making any charge. We went together to the notaire who produced the appropriate documentation on the spot. The house had already been valued and was below the tax threshold. The best of my recollection there was a fee of about €500 for notairial work and tax registration.

And that was that ... the house was mine to do with as I pleased. My children received no part of the property.

The concept of "tontine" is identical to the English purchase method of Joint Tenancy.

[idun]

CK I realised that it was like joint tenacy.

I really cannot accept the 'bitter' step kids argument. Not at all when it concerns France. You know where you are in France,  it is as it is if you live there. And I would like a similar law in the UK too, that eventually, some part of a parent's legacy goes to their own children.

[Rabbie]

[quote user="idun"]

CK I realised that it was like joint tenacy.

I really cannot accept the 'bitter' step kids argument. Not at all when it concerns France. You know where you are in France,  it is as it is if you live there. And I would like a similar law in the UK too, that eventually, some part of a parent's legacy goes to their own children.

[/quote]There is a law like that in the UK but it only applies to Scotland. In Scotland half of your total estate automatically goes to your spouse and one third is divided between your children.

With regard to the French law I would not want my share of our house to go to my daughter immediately on my death which might put Mrs Rabbie in a difficult situation. So a tontine would be my preferred solution.

[idun]

But they changed the law in France Rabbie, it is much better now than it was. Still needs some improving. But the kids don't get anything until the second parent dies, unless ofcourse the parent wants to sell up and then I believe they can apply for their share if they want to.

The trouble with all this is, that we can have good kids, but who they end up can be quite something else. My son's ex fiance would have had the remaining parent out and on the streets if the former rules still applied, my was she a greedy grabber. I'm glad they split up...... they did when all his money was gone. I never underestimate pillow talk!

EDIT

If the law in France is as it is, then it must not be forgotten that if parents say end up in a home, then their children and grandchildren and even great grandchildren will be asked to participate towards the costs, if the parent has not enough money.

[Loiseau]

Would not making a " donation entre epoux" be sufficient?

My husband and I were advised by our notaire to do that. It is a simple document to sign to say that the surviving spouse has the right to the house and the furniture for their lifetime, and only on the second death does it pass to the children.

When my husband died, it made things very simple.

Angela

[nectarine]

Only the house can be covered by tontine - the donation entre epoux covers money and other assets such as cars, jewellery, and gives you the maximum allowed under French law at that time and the complete use of it, to sell, dispose or whatever. So it is additional to the tontine.

Of course the simplest thing would be - if one partner doesn't have children and the other does - and there are no other immediate relatives such as survivng parents - that the assets are placed in the name of the childless spouse. That way, if spouse with children dies, there are no problems, and if the childless spouse dies the partner will inherit anyway.

[Kitty]

We have bought a house en tontine.

When signing at the notaire's office, we asked to take out a document against insaisissabilte (assets being seized in the event of our business being sued etc).  When our notaire was out of the room, the vendor's notaire whispered to me that with a tontine, the house is protected against insaisissabilte (assets being seized in the event of being sued etc) and that I did not therefore need such a document.

Does anyone know if this is correct?

[idun]

[quote user="nectarine"]Only the house can be covered by tontine - the donation entre epoux covers money and other assets such as cars, jewellery, and gives you the maximum allowed under French law at that time and the complete use of it, to sell, dispose or whatever. So it is additional to the tontine. Of course the simplest thing would be - if one partner doesn't have children and the other does - and there are no other immediate relatives such as survivng parents - that the assets are placed in the name of the childless spouse. That way, if spouse with children dies, there are no problems, and if the childless spouse dies the partner will inherit anyway.[/quote]

 

But what if the parent with kids dies first and their spouse consequently dies and leaves the money to the step kids............. in France, the kids will have to pay 60% death tax barring approx £1000. Quite simply, when we have both died, I want our kids to at least have my half, no matter what has happened subsequently. If I go first, I do not want some other woman having the money that should go to my kids.

We can never tell who will die first in a couple. No matter the health. My husband's Aunt and Uncle. Her heart problems started twenty years ago. He had just taken her to the doctors, they went to their daughters and he sat down in an armchair and nodded off and died. The Aunt is still going strong, but with the same heart problems. We just never know.

[Benjamin]

[quote user="nectarine"]Only the house can be covered by tontine - the donation entre epoux covers money and other assets such as cars, jewellery, and gives you the maximum allowed under French law at that time and the complete use of it, to sell, dispose or whatever. So it is additional to the tontine.[/quote]

We were most certainly told in 2005/6 when signing the "donation entre epoux" that property was included. That was the whole point of doing it and the Notaire was well aware of this fact.

We do not have children but I have a son. Whilst I would never expect a problem from him if I pre-deceased Mrs Benjamin, it seemed prudent to cover that eventuality.

[Loiseau]

I think what nectarine meant was that tontine covered only the house, whereas the "donation" covers house AND the other stuff.

As far as i remember, with the donation, the survivor couldn't sell without the agreement of the children, and giving each of them their share. But it did mean that as long as the survivor wanted to stay living in it, the children could not turn him/her out.

Angela

[Benjamin]

[quote user="Loiseau"]I think what nectarine meant was that tontine covered only the house, whereas the "donation" covers house AND the other stuff.

As far as i remember, with the donation, the survivor couldn't sell without the agreement of the children, and giving each of them their share. But it did mean that as long as the survivor wanted to stay living in it, the children could not turn him/her out.

Angela[/quote]

It's not worth splitting hairs but I posted because I read it the other way but again I remember it differently to you although I am getting older.  [:-))]

Except in the short term Mrs Benjamin couldn't have coped in the house so the option to sell and purchase more appropriate property was very important to us. But as I say I am less clear on this point.  [:D]

[nectarine]

sorry my message was misleading, I should have clarified. A donation entre epoux covers assets (including house, etc.)up to the maximum allowed under current French law, whatever that is. The house, however, is the only item that can be covered by the tontine and takes precedence - so with a tontine the house passes to the surviving owner absolutely and then the donation entre epouse is applied to other stuff.

It's always contentious talking about disinheriting kids and I understand people's views on both sides of it. If Parter no. 1 dies and everything to goes the survivor and then then they die but have willed the assets to the first partner's children, who are not blood related, then tax is payable. Of course the survivor may not choose to pass the assets to the stepchildren and the assets may be claimed by their own blood relatives instead and so the first partner's children are left out.

Like I said, the tontine doesn't suit everyone but if both parties wants to ensure that the survivor has complete control of the property and they don't care if the survivor then leaves everything to the dog's home or a subsequent partner well then that's a choice. It suited us.

I've told Mr. Nectarine that if I go first, he can have everything. If he then chooses to go mad and shack up wtih a buxom blonde and buy a Ferrari, well heck at least he'll die a happy man! I'll be long gone and past caring!

[nomoss]

In doing a little refresher on the latest inheritance law changes I read through this topic.

As far as I can see, no-one has mentioned the costs involved :

The cost of making a gift between man and wife is around €250 although, on inheritance, there are notaire fees for 'opening' the gift based on a percentage value of the inheritance (in the broadly the same terms as a will).

There is also gifts tax payable if the gift is over €80,724 (2012).

Source: http://www.french-property.com/guides/france/finance-taxation/inheritance/donation-epoux/ (near bottom of page)