Inheritance to the wife

[Vivi]

 Hi Everyone,Please can anyone advise me the best way to ensure that the property in France succeeds to the wife in the event of a husbands death? I beleive the "clause tontine" is advisable to acheive this outcome and at what stage should such a clause be in place i.e when the final contract is drawn up with the Notaire. Any help gratefully received. With thanks Vivi

[DerekJ]

You may want to read this. This relates to the régime de communauté universelle with the clause d’attribution intégrale.

This is what we were advised to do by the UK based French notaire we consulted prior to starting the house buying search.

You will see reference to the situation regarding children form any previous marriage.

Now at this stage we haven't actually found a house so I can't comment with knowledge of actually having it in process.

[united]

Vivi,

My understanding is that en Tontine meets your need but it is pretty inflexible. Once adopted it cannot be cancelled. In the event of a dispute no one owner can transfer his/her share to the other and that if you want to alter the form of ownership the only solution is to sell to a third party. There are some tax implications for valuable properties.

The French regime of Communaute universelle (for married couples) is similar to joint tenancy in the UK. It ensures the survivor retains the full ownership of the property and is tax free between husband/wife. This is implemented by a deed drafted by the notaire. The downside is that you have to be in France to sign the deed, however, it can be signed at before the property purchase is completed.

[cooperlola]

Our notaire advised us against the Tontine route, and suggested "communaute universelle" instead, too.  Such a lot depends, also, upon your situation vis a vis offspring etc.  Your notaire is best placed to advise you, really. There is very little "wriggle room" with French inheritance laws so you need to get it bang on before commiting to anything.

[Gardengirl]

We also took the 'communauté universelle' route last summer. We read all the advice on threads on this forum, took advice from a UK law firm which works on French business (costly) & told the notaire what we wanted to do. We signed this at the same time as the contract for our apartment. Can't remember the cost, seemed a lot, but was less than we had been warned; got a refund later.

Jo

[fussy]

so did we, it was ready for us to sign on the same day as the house sale, we arrived about 30mins before our sellers, it cost 400 euros

[Ron Avery]

[quote user="DerekJ"]You may want to read this. This relates to the régime de communauté universelle with the clause d’attribution intégrale.

This is what we were advised to do by the UK based French notaire we consulted prior to starting the house buying search.
You will see reference to the situation regarding children form any previous marriage.

Now at this stage we haven't actually found a house so I can't comment with knowledge of actually having it in process.
[/quote]

Isn't it strange that in all cases a  UK based "French lawyer"has recommended a method régime de communauté universelle that you have to pay them for when a simple clause tontine in the contract achieves the same thing for married couples with children. 

Of course it get complicated when there are children from previous marriages and that can get messy.  However, I like to know how you can be a UK based Notaire when Notaires work for the French state, business must be very slack until UK based property buyers come knocking[Www]

[DerekJ]

Ron.  The deal wasn't that I used that particular notaire to take out the régime de communauté universelle  but that simply that was the recommendation to acheive what we required from an inheritance perspective and that we should do that with the "business as usual" French based notaire who would be handling the purchase. The UK based notaire was used by us to provide us with guidance on not just this topic but far more wide ranging aspects of buying a house in France.

The person in question is/was qualified as a notaire and is French but now lives in the UK.

[Helen]

'Isn't it strange that in all cases a  UK based "French lawyer"has recommended a method régime de communauté universelle that you have to pay them for when a simple clause tontine in the contract achieves the same thing for married couples with children.'

As  I understood it at the time, the change of marriage regime applied not only to the house ( as would a tontine) but all 'biens' and therefore prevented  any assets being divisible or taxable on the death of one of us: there would be no estate I also have some vague memory that it was far easier to do it legally whilst still resident  in the UK. The French notaire here seemed quite happy with the documentation from the UK French lawyer.

[P-D de Rouffignac]

I have just introduced an English couple in course of buying a property in France to a local French notaire. They are married with one child and have an adopted child from a previous marriage of one of the partners. The notaire has advised a change of matrimonial regime to 'communauté universel' as on the death of one partner, the other has more freedom - for example, to sell the property without asking the children (the inheritors) for permission. This might happen if, for example, the surviving spouse did not wish to continue living in France on his/her own for family or health reasons. On the death of the surviving partner, the children would inherit the French property (if unsold of course) 50/50 automatically under French inheritance law.

The reason the documents have to be signed in France (a 'downside' according to one poster) is that a change of marriage regime is considered in French law to be an 'acte solonnel' (solemn act) and requires the advice of the acting notaire. The cost is quite reasonable but extra to the transaction costs if done at the time of purchase (it can be done later of course).

To explain its implications a notaire described it in English 'as a sort of legal fiction, in which the surviving partner is deemed to have been the original and sole owner from the beginning'. 

I hope this helps.

P-D de Rouffignac MA LLM

www.francemediterraneanproperty.com

 

 

[Phillippe]

[quote user="united"]

Vivi,

My understanding is that en Tontine meets your need but it is pretty inflexible. Once adopted it cannot be cancelled. In the event of a dispute no one owner can transfer his/her share to the other and that if you want to alter the form of ownership the only solution is to sell to a third party. There are some tax implications for valuable properties.

[/quote]

Your understanding is 100% incorrect . You may change away from the regime “Tontine” at any time. There is a charge which is calculated on the price of the properties worth at time of change.

Anybody considering this change should speak with their Notaire as they will give a free estimate on what your charges will be incurred for the whole process inc taxes. We had out Tontine removed after 4 years. We know of others also.

Phi.

 

[allanb]

Just one additional comment, based on what our notary told us: when you buy a property, you can (if you wish) immediately put "communauté universelle" into effect for that property by the form of the purchase contract. However, you may not be able to do the same thing for your other assets until you have been resident for a certain time. So if you buy the house before (or soon after) you become resident in France, you may need a second visit to the notary.

This is assuming that you don't already have a relevant marriage contract - which is probably true for most people arriving from the UK.

I'd be interested to know whether other people were told the same thing, if the question came up.

[Ron Avery]

What is wrong with a "clause tontine" for the property and a Will for the assets?

[Phillippe]

[quote user="Ron Avery"]What is wrong with a "clause tontine" for the property and a Will for the assets?[/quote]

The more we thought about the situation of Tontine after the death of one of us eg: the survivor would have to pay tax on the half belonging to the deceased (that is if the whole property is valued over 70,000 Euro’s (check figure as it might have now been revised) the stress of death and then having to pay was for us not a pleasant thought.[:@] We were not aware of any of this at the time and only went in Tontine in haste because somebody else had – now we understand that in certain circumstances –married before , sibling of prior marriage etc it could be suitable. But we had no complications like that. Talking with our new Notaire in France (speaks English like a native) she explained that in more complicated situations Tontine is excellent. For our circumstance the survivor would have had a very hefty tax bill to pay even though it is our one and only prime residence.

[Ron Avery]

"For our circumstance the survivor would have had a very hefty tax bill to pay even though it is our one and only prime residence."

Edit

When we bought our house we were told a tontine clause was ideal for our simple circumstance where if one partner in a marriage died, the property would then pass to the other's sole ownership rather than to their children under the normal French law of usufruit.

If the property was under a tontine clause and the house passes to the surviving joint owner rather than the children, how can any taxes be due?

I was certainly not made aware of this possibility by our Notaire when we entered into a tontine clause and have never read on here of anybody having had to pay any tax in a similar circumstance.  I suspect that this comes as news to quite a few married couples in France if it is true  Is this new?

 

[cooperlola]

http://www.french-property.com/guides/france/finance-taxation/inheritance/tontine/

[Maricopa]

My understanding is (was?) that though the tontine does give the surviving spouse the absolute right of ownership of the property following death, there is still inheritance tax to pay above the threshold between spouses (76,000€ last time I looked it up), so if a property is worth 176,000€, then inheritance tax wuld be paid on the 100,000€ difference (at about 30%, but don't quote me).  However under the communite universal regime, the surviving spouse still retains the absolute right of ownership (providing there are no children, I think, but don't quote me again), but there is no inheritance tax to pay, only transfer(edit from my initial post) tax at 1% on the whole value.  I know that recently there was a further change in law in this area, but am currently unsure of exactly what this changed.  However, the situation as I described above is as it has (had?) been for a long time.

[Cjlaws]

[quote user="Ron Avery"]

"For our circumstance the survivor would have had a very hefty tax bill to pay even though it is our one and only prime residence."

Edit

When we bought our house we were told a tontine clause was ideal for our simple circumstance where if one partner in a marriage died, the property would then pass to the other's sole ownership rather than to their children under the normal French law of usufruit.

If the property was under a tontine clause and the house passes to the surviving joint owner rather than the children, how can any taxes be due?

I was certainly not made aware of this possibility by our Notaire when we entered into a tontine clause and have never read on here of anybody having had to pay any tax in a similar circumstance.  I suspect that this comes as news to quite a few married couples in France if it is true  Is this new?

 

[/quote]

There is indeed a tax bill to be paid by the surviving party of a Tontine. The exemption from inheritance tax was removed by the 1980 budget (Article 69 de la loi n°80-50 du 18 janvier 1980) by amendment to the Code Général des Impôts (article 754-A). Only property which is the principal residence of the parties is exempt from tax, and then only if is worth less than 500,000FF (now €76,000). This exemption ceiling has never been altered.

[Chezstevens]

Talking principle property only / married couples only.  With 'en tontine', when one spouse dies, the other receives the property as if the partner had never existed with no tax liability for the property.  On death of the surviving spouse the children etc will only have one threshold relief for tax so will pay more tax.

[Cjlaws]

[quote user="cooperlola"]http://www.french-property.com/guides/france/finance-taxation/inheritance/tontine/[/quote]

Unfortunately the statement in this link:

"If you are married or in a French civil partnership there is no

liability to inheritance tax for the surviving spouse/partner. So the

use of a tontine clause between such couples does not pose a tax problem." is just plain wrong.

[cooperlola]

[quote user="Cjlaws"][quote user="cooperlola"]http://www.french-property.com/guides/france/finance-taxation/inheritance/tontine/[/quote]
Unfortunately the statement in this link:
"If you are married or in a French civil partnership there is no liability to inheritance tax for the surviving spouse/partner. So the use of a tontine clause between such couples does not pose a tax problem." is just plain wrong.
[/quote]Thanks, Christopher.  I know the editor, so I will take this up with him.

[DerekJ]

[quote user="Cjlaws"]

There is indeed a tax bill to be paid by the surviving party of a Tontine. The exemption from inheritance tax was removed by the 1980 budget (Article 69 de la loi n°80-50 du 18 janvier 1980) by amendment to the Code Général des Impôts (article 754-A). Only property which is the principal residence of the parties is exempt from tax, and then only if is worth less than 500,000FF (now €76,000). This exemption ceiling has never been altered.

[/quote]

This is consistent with what we were told and is supported by several website searches including this one.

The only difference appears to be that there is a further uplift of €50k with the allowances depending on the circumstances. I'm not putting this forward as the definitive source of information but it seems to be born out by other sites if you google "Tontine inheritance".

[Cjlaws]

Here's the relevant French text:

Article 754 A (Code Général

des Impôts)

 

Les biens recueillis en vertu

d'une clause insérée dans un contrat d'acquisition en commun selon laquelle la

part du ou des premiers décédés reviendra aux survivants de telle sorte que le

dernier vivant sera considéré comme seul propriétaire de la totalité des biens

sont, au point de vue fiscal, réputés transmis à titre gratuit à chacun des

bénéficiaires de l'accroissement.

Cette disposition ne s'applique pas à

l'habitation principale commune à deux acquéreurs lorsque celle-ci a une valeur

globale inférieure à 76 000 euros.

[cooperlola]

Thanks again - I'll try to get this fixed! [:)]

[Boiling a frog]

I wonder if they are in fact correct since Sarkozy did away with inheritance tax between spouses and PACS.