Changing the Marriage Regime

[Monika]

After some previous advice on the forum we have decided to go ahead and change our Marriage Regime to a communauté de bien. Next time we are in France we will make an appointment to see a Notaire. Does anybody know what papers we need? (Tried to search on the forum but could not find this question/answer).

[Poppy]

We took birth certs, marriage cert, passports, any information re purchase/value of house and the cheque book. All went well [:D]

[Monika]

Thank you for your reply Poppy, I seem to remember that it was mentioned somewhere that the marriage cert needs to be recent (not older than 3 month). What is your experience?

[Poppy]

Our marriage certificate is 37 years old and there wasn't a problem.  The Notaire even accepted the short version of the UK birth certificate. The whole process was very quick and painless, apart from paying of course.

[Monika]

Thanks Poppy that will simplify things because our marriage certificate is one year younger than yours!

[Loiseau]

And - not suggesting that it is necessary in your case...    if either of you has been divorced, then be sure to take your divorce certificate too. 

France was the only place we were ever asked for my husband's divorce certificate, so it was always a hassle to put our hands on it!

Angela

[Tourangelle]

We just changed are marriage regime today, to the communauté universelle, having previously been considered to be married under the regular French contract, as although we got married in England we have always lived in France since our wedding. I thought people might be interested to know that it cost 800 euros and that as of the beginning of the year, you no longer need a lawyer to validate it.  We had a very effecient seeming notaire, recommended by the consulate.

[SC]

I'm surprised to hear that it cost you 800€. I have read a few French forums on the subject and the cost seemed to be 200-300€. I have just done a google.fr search for 'regime de mariage combien ca coute' and the first relevant site said 150-300€

Steve 

[Pickles]

[quote user="Sc"]

I'm surprised to hear that it cost you 800€. I have read a few French forums on the subject and the cost seemed to be 200-300€. I have just done a google.fr search for 'regime de mariage combien ca coute' and the first relevant site said 150-300€

Steve 

[/quote]

In our case there was a tax to pay calculated on the value of the property concerned by the change in marriage regime which had to be added to the (fairly nominal) fee charged by the notaire. Hence the total cost will vary according to your circumstances.

Regards

Pickles

[Georgina]

Tourangelle, could you explain in simple terms, what you understand, as to how this change will affect you please, without being too personal, how would it affect a married couple I mean.

Georgina

[Catalpa]

[quote user="Pickles"]

In our case there was a tax to pay calculated on the value of the property concerned by the change in marriage regime which had to be added to the (fairly nominal) fee charged by the notaire. Hence the total cost will vary according to your circumstances.[/quote]

That's right. So if anyone is considering changing their marriage regime and they're planning a substantial renovation, change the marriage regime before the reno so that the tax calculation is on the value of the pre-renovated property.

[Pickles]

[quote user="Georgina"]

Tourangelle, could you explain in simple terms, what you understand, as to how this change will affect you please, without being too personal, how would it affect a married couple I mean.

Georgina

[/quote]

Whilst awaiting Tourangelle's reasons for doing this, I'll explain ours. It's to do with what happens when one partner of a couple dies. Basically IIRC the default treatment in France of a UK marriage is that it equates to "separation de biens" - ie purchases are treated as being the property of the partner in whose name the purchase is made. When the person dies (under French law), those items purchased in the name of the deceased become part of their estate, as does their share of any property or chattels purchased jointly. This then becomes subject to inheritance tax (the amount of which depends on what the relationship of the receiving heirs is to the deceased and the amount that they receive). The levels at which inheritance tax becomes payable are relatively low, and there is no exemption from the tax in the case of an estate being received by the spouse (this exemption exists in the UK) - in France I believe that inheritance tax becomes payable on inheritances above 76000€ left to a spouse.

By changing the marital regime to some form of communaute (either de biens or universelle or whatever),  then when one dies, the other automatically in effect becomes the owner of the whole of the property concerned and it does NOT form part of the estate of the deceased. This means that the surviving spouse  does not have to pay French inheritance tax on the succession.

This change of regime (which also obviously has the effect of disinheriting the children from the succession of the first to die) can only be done without going to court if there are either a) no descendents or b) no minor children AND all of any adult children agree to the change.

Of course, once the surviving spouse dies, the whole of the estate then becomes subject to inheritance tax. If there are descendents, then communaute is obviously not terribly inheritance-tax-efficient.

Regards

Pickles

[Jacqui Too]

When we purchased our French property earlier this year we used a English lawyer specialising in French Law, she noticed that our marriage regime that was recorded in the 1st contract as 'le regime legal de la communaute', we decided to change this to 'le regime legal' with her advice with regards to our suituation. 

We own our property here as tenants in common and wished to own our French property in the same manner. As we only have one daughter it is the best and most tax efficient way for us to own both properties

So I think that every suituation is different and needs legal advice.

Not sure how they came up with us being married ' le regime legal de la communaute' in the first place anyway!!

Chipie

 

[aj_dr]

When purchased our property we took out the Universelle form, at the time this covered the property we were purchasing plus one we had had for 20 years, it did not cover anything else. We have since visited the Notaire who has registered an appendix to the original and now it covers everything. For some reason he wouldn't cover everything until we lived here permanently.

aj

[Gardengirl]

I'm now feeling more confused than ever over marriage contracts!

We are supposed to be having a 'formal community marriage contract' to sign at the same time as we sign the final contract. (This is on hold just now, due to the developers making changes to the plans, but should be resolved one way or the other in about 10 days!)

Having read this thread, I'm also aware of 'communaute de bien', 'communaute universelle' (CU), 'le regime legal de la communaute' and 'le regime legal'. All very confusing!

We are a semi-retired married couple, who will be spending half the year in France. We have 2 adult sons, no previous marriages or children. What we want is to ensure that the surviving spouse will be assured that the property will go to him/her.

Can someone tell us if the 'formal marriage contract' is the same of any of the above? Or better/worse/just different?

Have read about the costs of other people's contracts; ours is due to cost E500 when we go to sign the final contract, with the same notaire.

Jo

 

[Pickles]

[quote user="Gardengirl"]

We are supposed to be having a 'formal community marriage contract' to sign at the same time as we sign the final contract.

Having read this thread, I'm also aware of 'communaute de bien', 'communaute universelle' (CU), 'le regime legal de la communaute' and 'le regime legal'. All very confusing!

We are a semi-retired married couple, who will be spending half the year in France. We have 2 adult sons, no previous marriages or children. What we want is to ensure that the surviving spouse will be assured that the property will go to him/her.

[/quote]

The commentary below is based on my understanding of the law. I'm pretty certain that it is correct but I am fallible.

If you went for any "communaute" regime - there are various flavours but let's keep it as simple as possible - then yes, the surviving spouse would get the WHOLE of the property, essentially free of inheritance tax. However, IIRC, you would have to get your sons to agree to this, as they would in effect be disinherited in the first death. On the second death, they would be reserved heirs of two-thirds of the estate (one-third each - the remaining third can be left to them via a will) AND they would have to pay inheritance tax on the whole of the amount left to them minus whatever allowance pertains at the time (currently 50K€ each). One would also expect that the estate would be worth more by the time of the second death, so the tax bill will be high on the second death.

However, if as an alternative you use/stick with some form of "separation de biens", then the sons will be reserved heirs on the FIRST death, and will be entitled to one-third each. The remaining third can be left to the surviving spouse via a will or to the children or whoever. The estate of the deceased will be worth half of the value of the "total" estate. The surviving spouse will have the right of usufruit - ie the right to benefit from the use of the property for the rest of his/her life, but will not own it outright. Some tax may be payable, depending on the value of the estate and the allowances  - currently 76K€ for the surviving spouse and 50K€ for each child.

In this case then, on the second death, the size of the estate will depend on what happened to the one-third that could be disposed of via the will of the first to die. (Eg if it was left to the surviving spouse, then the estate on the second death will be effectively two-thirds of the original "total" estate). However, again the children will be reserved heirs, they will receive a second dollop of allowances, and thus the overall tax bill (across the two deaths) is likely to be rather lower than if a "communaute" regime was used.

So, where there are children, there are tax reasons for not having a "communaute" regime.

There are other issues to take into account which may or may not concern you: what is your relationship with your children (eg do you trust them); and a real wild card: what if the surviving spouse remarries? If you'd had a coummunaute regime, and the surviving spouse remarried with a communaute regime, the children could be disinherited if the surviving spouse were to be the first to die of the NEW couple ....

I think that the moral of the story is that YOU MUST TAKE COMPETENT LEGAL ADVICE - the notes above do NOT count as that!

Regards

Pickles

[Jacqui Too]

[quote user="Gardengirl"]I'm now feeling more confused than ever over marriage contracts!

We are supposed to be having a 'formal community marriage contract' to sign at the same time as we sign the final contract. (This is on hold just now, due to the developers making changes to the plans, but should be resolved one way or the other in about 10 days!)

Having read this thread, I'm also aware of 'communaute de bien', 'communaute universelle' (CU), 'le regime legal de la communaute' and 'le regime legal'. All very confusing!

We are a semi-retired married couple, who will be spending half the year in France. We have 2 adult sons, no previous marriages or children. What we want is to ensure that the surviving spouse will be assured that the property will go to him/her.

Can someone tell us if the 'formal marriage contract' is the same of any of the above? Or better/worse/just different?

Have read about the costs of other people's contracts; ours is due to cost E500 when we go to sign the final contract, with the same notaire.

Jo[/quote]

Gardengirl

I have sent you a PM Hope it helps[:)]

Chipie

ps sorry it appears so long[:-))]

[Georgina]

Thanks for your explanation Pickles, it was very interesting.

Chipie,

you could post your message on here and therefore everyone gets the benefit of your advice. That is what we are here for.

Georgina

[Jacqui Too]

[quote user="Georgina"]Chipie,

you could post your message on here and therefore everyone gets the benefit of your advice. That is what we are here for.

Georgina[/quote]

Here is the PM I sent to Gardengirl:

Hi Gardengirl

I have sent you this extract from the advice we received from our lawyer.

It explains how each regime works in straight forward English

We opted for En indivision because we only have one daughter and we are confident that she would not go against either myself or my husband should either of us die whilst we own a property in france and we are more concerned about tax liability that the possibility of future problems with our daughter

I know that the lawer only refers to our 1 daughter and that you have 2 sons/ daughters but I think it explains very well

Good Luck

Jackie

_________________________________________________________________________

There are three main options open to you in terms of estate planning and I would summarize these briefly as follows:

 1.      En Indivision

 You can purchase the property in the classic French way called “en indivision”. This is the default method of ownership and is similar to owning as tenants in common under English Law.

 It means that each of you owns a distinct share in the property (usually ½ each but can be in other proportions).

 On the death of the first spouse, the deceased’s half share will pass automatically as to ½ to your daughter, who is known as your “reserved heir”.

 The surviving spouse then has the choice of the following options:-

 a) He/she can take absolutely whatever remains from the legal reserve i.e. 1/2 of the deceased’s estate;

b) He/she can take ¼ of the estate absolutely and enjoy a life interest in the other ¾;

c) He/she can take a life interest in the whole estate.

 A life interest is the right to use and enjoy the property for the rest of your life and means that any other person (such as your daughter) having an interest in the property cannot force you to vacate or sell the property against your wishes.

 The restriction of owning en indivision is that if on the death of the first of you, the survivor wished to sell the property, your daughter would need to join in the sale because her status as reserved heir means the survivor of you would not have complete control over the property.

 In practice, this is rarely a problem provided the value of your daughter’s interests is reflected in any new property purchased and that relations with her are unproblematic.

 The main advantage of owning en indivision is that this is the most tax efficient way of owning property and ultimately passing it on to your daughter. The surviving spouse is (currently) entitled to an inheritance tax allowance of 76,000 Euros and your daughter will benefit from a 50,000 Euros allowance on the value of the half share in the property passing on death.

 Therefore, inheritance tax will only be due on any amount above this (and then on a sliding scale ranging from 5% to 40%).

 In addition, an extra general allowance of 50,000 Euros currently applies, which further reduces the overall amount of tax payable. Inheritance tax will therefore only be payable once all these allowances have been exhausted.

 Taking into account the current value of the property and the available allowances, there would be no inheritance tax payable in France on your deaths if you were to own the property in indivision.

 Note however that if the value of the property increased considerably, there may be some inheritance tax to pay.   

 2.      Universal Community

 For married couples, the adoption of the French marriage regime of universal community is increasingly popular. It replicates a joint tenancy under English law and ensures that on the death of the first spouse, full ownership passes to the survivor. Therefore, your daughter’s interests would be postponed until the subsequent death of the survivor of you.

 The advantage of universal community is that the surviving spouse gains full control over the property upon the death of their spouse with only a 1% transfer tax being payable instead of inheritance tax.

 Note however that your daughter’s inheritance tax liability could potentially be greater because she would only benefit from her tax-free allowance on the death of the second parent (as opposed to on the death of each parent, which is the case when buying en indivision).

 The adoption of universal community involves the signature of a change of marriage regime deed in front of the notary. The notary will charge a small extra fee for this (approximately 400 euros), calculated in accordance with the purchase price of the property.

 Note also that we generally arrange for the change of regime deed to be worded to apply to your French assets only (thereby leaving your English assets to be governed by English Law). It does not in any way affect the status or validity of your marriage in England.

 Whilst it is advisable to make this election to coincide with completion of your purchase this is not crucial as it can be done at a later date.

 3.      Tontine

 The purpose of inserting a tontine clause into the purchase deed is also to ensure that joint assets pass to the survivor on the first death.

 However the difference between tontine and universal community is that with a tontine clause, on the death of the first spouse, the survivor is deemed always to have been the sole owner of the property.

 Thus, the interests of any children who would normally be entitled to inherit a share on the death of a parent (pursuant to the French law of reserve) are ignored.

 A tontine clause is useful where the purchase price of the property is fairly modest. It becomes less attractive where higher values are involved.

 As we have mentioned above, spouses are entitled to an allowance of 76,000 Euros plus a further 50,000 Euros if he/she is the sole beneficiary. Therefore total allowances of 126,000 Euros should be available to the survivor on the first death.

 Provided the value of the property did not exceed 252,000 Euros on the first death, no inheritance tax will be payable by the survivor on the value of the half share passing to them.

 Note however that where a tontine clause applies, your daughter’s allowance of 50,000 Euros will be lost on the first death.

 Another disadvantage of a tontine clause is that it can only be revoked by mutual consent and can therefore lead to complications in the event of separation or divorce.

 Many of the notaries we deal with are reluctant to recommend the use of the tontine and for married couples whose children are common to the marriage such as in your case, the adoption of universal community is generally considered to be the better option if control of the property for the surviving spouse is the main concern.

 Summary of purchase options

 We will be happy to discuss these options with you further.. It is a complex area of law and the decision you make should be based on what you consider most important - retaining control over the property for the surviving spouse or minimizing future tax liability.

 We would add that as things stand there is no need for you to make a French Will, as French law will govern what happens to the property regardless of any contrary provisions contained in such a Will.

Chipie

 

[allanb]

Despite what Pickles says, I bet he's not as fallible as I am.

However:

[quote user="Pickles"]If you went for any "communaute" regime - there are various flavours but let's keep it as simple as possible - then yes, the surviving spouse would get the WHOLE of the property, essentially free of inheritance. However, IIRC, you would have to get your sons to agree to this, as they would in effect be disinherited in the first death. [/quote]Are you sure about this?  My wife and I adopted the same regime after we settled in France, and the question of consent from our children was never raised.[quote]

One would also expect that the estate would be worth more by the time of the second death, so the tax bill will be high on the second death.[/quote]You're making a big assumption here - that the surviving spouse would not find ways of spending the money faster than the income came in.  My wife has warned me not to assume this.

[Pickles]

[quote user="allanb"]

[quote user="Pickles"]If you went for any "communaute" regime - there are various flavours but let's keep it as simple as possible - then yes, the surviving spouse would get the WHOLE of the property, essentially free of inheritance. However, IIRC, you would have to get your sons to agree to this, as they would in effect be disinherited in the first death. [/quote]Are you sure about this?  My wife and I adopted the same regime after we settled in France, and the question of consent from our children was never raised.[/quote]

I'm pretty sure that this is correct, (I looked it up on a couple of notaire-related sites) but haven't looked at the best source - which would be the original law (which is on-line). But I would not stake my life on it.

[quote user="allanb"]

[quote user="Pickles"]One would also expect that the estate would be worth more by the time of the second death, so the tax bill will be high on the second death.[/quote]You're making a big assumption here - that the surviving spouse would not find ways of spending the money faster than the income came in.  My wife has warned me not to assume this.

[/quote]

Strangely enough, that is the point of view of my other half as well ...

Regards

Pickles

[Nicos]

[quote user="Gardengirl"]

I'm now feeling more confused than ever over marriage contracts!

We are supposed to be having a 'formal community marriage contract' to sign at the same time as we sign the final contract. (This is on hold just now, due to the developers making changes to the plans, but should be resolved one way or the other in about 10 days!)

Having read this thread, I'm also aware of 'communaute de bien', 'communaute universelle' (CU), 'le regime legal de la communaute' and 'le regime legal'. All very confusing!

We are a semi-retired married couple, who will be spending half the year in France. We have 2 adult sons, no previous marriages or children. What we want is to ensure that the surviving spouse will be assured that the property will go to him/her.

Can someone tell us if the 'formal marriage contract' is the same of any of the above? Or better/worse/just different?

Have read about the costs of other people's contracts; ours is due to cost E500 when we go to sign the final contract, with the same notaire.

Jo

 

[/quote]

We signed our final contract last week and signed something at the same time in line with the Haig convention- meaning either of us would inherit the house with no tax to pay on the first death. We were not told of any extra cost, but will let you know if we get a bill for it!!

We are in a similar position- only marriage, 2 adult children( who were not asked if they gave their consent to this) and no intention of divorce. We intend to spend a little more time in UK than France each year . Hope that helps??

[Pickles]

[quote user="Nicos"]

We signed our final contract last week and signed something at the same time in line with the Haig convention- meaning either of us would inherit the house with no tax to pay on the first death. We were not told of any extra cost, but will let you know if we get a bill for it!!

We are in a similar position- only marriage, 2 adult children( who were not asked if they gave their consent to this) and no intention of divorce. We intend to spend a little more time in UK than France each year . Hope that helps??

[/quote]

As is usual with inheritances, there are two different aspects which in the UK we tend to mix together (because of the concession that allows assets to pass between spouses on the death of one without being subject to inheritance tax) but in France they are completely separate. The two aspects are the succession laws, which govern who can be given what, and the inheritance tax rules, which determine how much tax is paid and by whom.

My understanding of the Hague situation (which is subject to the usual fallibility caveats) is that there are TWO conventions which may apply, and their effects are subtly different:

You can use the 1961 Hague convention to apply a UK or other foreign will to override French succession law, but this does not and cannot override French inheritance tax rules. Hence under this, for example you could decide to leave everything (via a UK will) to your favourite niece. The notaire handling the succession could cope with this (after an interminable delay whilst the UK will is translated and checked for being valid in the UK!). The French taxman, however, would say the equivalent of "That's OK, but as she is not a direct relative, her tax-free allowance is 5K€ and above this there will be a tax liability that rapidly rises to 60%." (Accompanied by the usual shrug).

You can use the 1978 Hague convention to adopt a suitable French marriage regime in respect of your French property (which is what I suspect you have done) which may then have the effect of passing the assets between you on the death of one of you with no French inheritance tax  liability (as discussed earlier in the thread).   When we did this, the notaire's clerk was very exercised about whether there were any children (there weren't) and whether they were adult or minor (still none).

Incidentally, I have now discovered that my wife plans to outlive me (and I am now becoming paranoid, wondering how she can be so sure), sell up in France to avoid the hassle, and spend the money circling the globe in luxury for the rest of her life. Problem solved.

Regards

Pickles

[Tourangelle]

[quote user="Pickles"]If you went for any "communaute" regime - there are various flavours but let's keep it as simple as possible - then yes, the surviving spouse would get the WHOLE of the property, essentially free of inheritance. However, IIRC, you would have to get your sons to agree to this, as they would in effect be disinherited in the first death. [/quote]Are you sure about this?  My wife and I adopted the same regime after we settled in France, and the question of consent from our children was never raised.[quote]

[/quote]

Careful!  The basic regime is called the commanauté réduite aux acquis, it is the basic default contract, and it DOES not mean the surviving spouse gets everything.

Also, you only need consent from children if the children are not from the marriage.  Otherwise it makes no difference to children from the marriage, except they inherit later (on the death of the surviving spouse) and pay more taxes, because they inherit more all in one go.  I signed my communauté universelle on Wednesday, so my information is up to date!

[thetwoofus]

so how does this fit,,,,  wife  and I  each have two older kids each from previous marriages, so far so good,,,,I   was a widower when we meet ,,,,and she was divorced, ok now, so we got married and a few years down the line we divorced and split.  some time later we got back together  and remarried ,,,, phew,,, now we want to live in france and start a business ,we are thinking   C/U has to be the best way to go .    but is it ???? I dunno ,,wad ya rekon....  I thankyou