Advice re French Inheritance Laws

[schoolsoutforever]

We are thinking seriously about moving to France but are concerned with the French Inheritance laws.

We would not want our property or assets passing to our only child on the death of one of us.

Is there anyway that we as a married couple who have joint ownership in everything as well as joint bank accounts could not be subject to this on the death of one of us if we purchased a property in France.

 

We would want everything including property and all assets to go to the other spouse on the death of the other and not to our daughter our only child.

Any advice about how we go about ensuring this would be appreciated.

Unfortunately if this cannot be done we would have to give up our dream of moving to France for our retirement. it is indeed a deal breaker so we do hope it can be done.

 

Any help appreciated.

 

[andyh4]

To get a definitive answer we have to ask you one question.

 

Should the property go to the daughter on the death of the second one of you?

There are solutions but the optimum will depend on the answer to this question

[parsnips]

Hi,

       There is a simple way to get what you want (provided your daughter is the natural child of you both) . See a notaire and change your marriage regime to the french regime of "communauté universelle-avec clause d'attribution integrale".

You can do this under the terms of the Hague Convention on Marital

Property Rights. Under this regime , on the death of the first spouse

the survivor inherits the whole joint estate , without tax and without

opening a full succession process.Your daughter inherits after the second death. If the second death takes place in France there is no way to deprive your daughter of her reserved part of the estate -1/2-at that time. This solution is quite common here for UK couples.

      IMPORTANT; sign the marriage contract BEFORE buying the french house to keep costs down -if you do this it should only cost a few hundred euros in notaires fees.

[idun]

When we looked into changing the marriage regime to a universelle, two notaires in France said that if it had been done with the express purpose of moving to France and effectively disinherit offspring then it could not be done without their permission.

Since then the laws have changed to some degree and the surviving spouse has more rights.

 

You need lots of advice. People talk of buying en tontine, but that has monetary limits on it too for it to work well.

Incidentally I do understand why people can want to disinherit their children, either forever or just until both parents have passed.

[andyh4]

It is not often that I disagree with you Parsnips, but surely if a non-French company bought the property, then the owners of that property could leave the proceeds as their non-French will allowed.  The daughter could then be totally disinherited - if that was what was required.

 

This of course is not without cost and hence my question about the wishes on the death of the second partner.

[parsnips]

[quote user="andyh4"]

It is not often that I disagree with you Parsnips, but surely if a non-French company bought the property, then the owners of that property could leave the proceeds as their non-French will allowed.  The daughter could then be totally disinherited - if that was what was required.

 

This of course is not without cost and hence my question about the wishes on the death of the second partner.

[/quote]

Hi,

From the OP's wording, I surmised that he probably meant only to preserve full rights for the survivor during their lifetime, and was happy for the daughter to inherit finally. If not, then we are into family feud country, and reason goes out the window, so any device to disinherit, however complex and expensive may be considered.  I was just trying to keep it (fairly) simple. 

[idun]

Under french law, cannot children take the estate to court to say that they have been illegally disinherited?

Please remember that in France it isn't just the inheritance that works in 'family values', if an a parent has to go into a home and cannot support themselves, then the kids have to pay towards their upkeep. And the french authorities will contact family that lives abroad. Certainly did with my neighbours.

[andyh4]

They can but I am fairly certain that this would be beyond the jurisdiction of the French courts - dealing with a non French will, made by non French individuals who would be leaving a company (and not real estate) to whomsoever they wished.

 

But to take this any further we would need to clearly understand the OP's final wishes.

[Mikep]

Just a thought to the original poster - if everything goes to the spouse on the first death, then you fail to use the tax-free allowance from parent to child (156,794 euros the last time I looked), which is then lost for ever. Our Notaire advised giving the spouse a Life Interest in the property (Jouissance) and passing the residual interest to the child (children in our case) on the first death. It depends on your long-term wishes, but beware any simple solutions - you need good advice from a Notaire.

[cooperlola]

[quote user="Mikep"]Just a thought to the original poster - if everything goes to the spouse on the first death, then you fail to use the tax-free allowance from parent to child (156,794 euros the last time I looked), which is then lost for ever. Our Notaire advised giving the spouse a Life Interest in the property (Jouissance) and passing the residual interest to the child (children in our case) on the first death. It depends on your long-term wishes, but beware any simple solutions - you need good advice from a Notaire.
[/quote]The problem with giving a life interest in "the property" is that the poor surviving spouse may not want to remain in it and then they are stuffed.  What if they wanted to sell up and go back to UK jurisdiction - how much clout would the joint owner (the child) have over the surviving spouse's rights to live where they wish.  What if they want to sell up and sink all the money into paying towards a decent retirement facililty?  The o/p might prefer to sacrifice the child's tax advantage - they probably already have a home and a good job anyway - in favour of independence?  I reckon that Mike's last phrase is the important one here.[:)] 

[Mikep]

It's a fair point - it was less of a problem with us with three children - since the spouse would still own one half outright and a life interest in the other half, all four would have to agree to any disposal. I would expect the proceeds and ownership shares to be rolled over to any new purchase. We get on well with all three, and I would be prepared to take the risk of them falling out later, in order to take 470,000 euros out of the (potential) inheritance tax net on the first death (one full allowance for each child). The basic comment still applies - there are different solutions for different situations.

[schoolsoutforever]

Hi Andy thanks for you posts.

 

Ideally we would want our property and assets to go to a charity on th edeath of the second partner.

 

What implications would this have? Or what implications would it have if we siad it could go to our daughter.

 

Ultimately we really want it all to go to charity once we are both dead.

 

 

 

 

[schoolsoutforever]

Hi Andy thanks for you posts.

 

Ideally we would want our property and assets to go to a charity on the death of the second partner.

 

What implications would this have? Or what implications would it have if we siad it could go to our daughter.

 

Ultimately we really want it all to go to charity once we are both dead.

 

[andyh4]

That is what I half expected from the original posting.

 

In that case on no account should you or your OH purchase a property in France as persons - individual or married/joined.  French inheritance law is very strict and persons cannot disinherit their children.  This is based on Napoleonic law and is also the basis for regulation in a number of other European countries.

You will certainly need professional help and advise well beyond anything I can give, but my belief is that if you set up, for example, a UK company, owned by yourself and OH, that company can buy the property.  Provided your UK wills are then properly arranged the company then passes to whomsoever you designate - although even in the UK it can be contested, the rules are normally far less strict.

 

There are some tax downsides however.  As users of the company property you will be receiving "benefits in kind" and these are taxable in the UK.  There will be an ongoing cost to this kind of arrangement - and again professional advise is needed.  It may be that it could be more advantageous to set up the company for tax purposes outside of the UK - so do not let my ideas form a firm plan, but rather an outline solution.

 

Good luck and I hope you can find a solution that works for you.

[parsnips]

[quote user="schoolsoutforever"]

Hi Andy thanks for you posts.

 

Ideally we would want our property and assets to go to a charity on the death of the second partner.

 

What implications would this have? Or what implications would it have if we siad it could go to our daughter.

 

Ultimately we really want it all to go to charity once we are both dead.

 

[/quote]

 Hi,

   On the death, in France, of the second spouse the estate goes automatically to the daughter if no other arrangements are made . The simplest compromise would be for the surviving spouse to have a will leaving their "quotité disponible" in this case 50% of the assets, to the charity chosen (make sure it is one  recognised by the french authorities so it pays no taxes). And the balance to the daughter .

  Both spouses can make their wills to this effect now , as they don't know who will be the survivor.

  Any method of depriving the daughter of the whole inheritance ( if indeed feasible) will be complicated and expensive , and almost certain to be vulnerable to challenge after the second death, so you would never really know what might happen.

[schoolsoutforever]

Thanks for all your help. Just one more question.

 

If when on the death of one partner in the marriage the other ones sells up and moves back to the UK are we still bound by any French Inheritance laws?

 

Sorry to keep bothering you - so many questions.!

[parsnips]

[quote user="schoolsoutforever"]

Thanks for all your help. Just one more question.

 

If when on the death of one partner in the marriage the other ones sells up and moves back to the UK are we still bound by any French Inheritance laws?

 

Sorry to keep bothering you - so many questions.!

[/quote]

Hi,

       No. Once you establish UK tax residence (by informing HMRC of your arrival and intention to stay) you come under UK inheritance law and taxes--except for any real estate you still own in France.

[idun]

And if you sell up upon the demise of one of her parents, then your daughter could get just under the half owed from their deceased parent and take the surviving parent to court to get it.

You want to live in France you have to accept that certain values are intrinstic to life in France. They used to worry me and I didn't like some of them at all, however, they were part of 'life' in France.

eg My MIL in the UK married other than my husband's Dad. They bought a house and she paid for everything just about for the 30 years they were married. She had one son, my husband, and a good relationship with us all. However, she would not make a will as she said that she would die. I told that we had and that one day we too would die, as would our kids, inevitable! She still wouldn't and died, and everything went to her husband. He had never had any children. Everything he had was from her. He was decent enough to make a will and in fact left  a little something to our children, not my husband. Basically, none of the money he had was his, he had never ever contributed. In France what would have happened when my MIL died,  my husband would have been entitled to just under half the value of the house when my MIL died and would have got it (under recent new legislation) when his step father died.

When I die, if my husband is still alive, I would not want him to remarry without sorting his affairs out properly or a new wife could get everything, when I believe that at least 'my' half should go to our children or their children if we are not getting on.

So becareful what you do with all this. You have been given some sound advice on here, but you really are trying to go against something very fundamental to life in France.

 

 

 

 

[schoolsoutforever]

Thank you all for your advice and time.

[Mikep]

It's not just in France where there can be unfortunate consequences. An English friend with three lovely daughters (two at university, one just left) remarried in April one year. Tragically she was killed in a car crash ten months later. She had not re-made her will (the original was automatically invalidated on her re-marriage) so the new husband got everything - house, savings, life insurance, pension, compensation from the accident. Her three girls got absolutely nothing. It's not just tedious paperwork - it really is worth thinking ahead. Sorry to dampen the discussion!

[Rabbie]

Just shows the importance of making sure you have a valid will

[Jon02]

Ownership via a UK private company is certainly possible and does by-pass French inheritance; it's the regime that I use. There are a couple of downsides. first the CGT regime is different, essentially the tax is double that of a private individual. And it's almost impossible to get bills set off against CGT. And finally, the cost of the original purchase (for CGT calculations) is depreciated by 2% each year.

That said it does what it says on the tin, the assets are now UK shares that can, should you wish, be left to chartity on the survivor's death under UK law. But get proper advice.