En Tontine Clarification

[Christian]

If a UK resident, who owns a house ‘En Tontine’ in France, dies leaving debts to a UK bank and to the

Inland Revenue, are the bank and the Inland Revenue entitled to claim against

the property?  Or is the surviving

partner in the ‘En Tontine’ quite

safe from any claims?

Thanks,

Christian

[Will]

In France the heirs are usually liable for the deceased's debts.

[Llwyncelyn]

Turn that around somewhat and substitute Inland Revenue then the bank.  That is of course unless the Bank in the UK has a legal charge registered at Her Majesty's Land Registry against property.  When someone dies in the UK then one presume there is a will in being?  If not then various legal instruments are available which give effect to the assets of the deceased being vested in either members of the family or Trustees or whatever.  Again if the estate if of nominal value then there are ways around this requirement.

I suppose a starting point (and I do not wish to know) is the level of borrowings to the bank and the amounts outstanding to the Revenue.  For Revenue I suppose you read Tax NIC VAT or whatever and wherever you are in the UK they have absolute priority it is a common law power that goes back hundreds of years.  Not to be messed with.

Naturally just because someone dies does not mean that they debts die with them.  The responsibility for the discharge is the estate of the deceased and one way or the other then I would think Revenue first preferred creditors afterwards and unsecured way down the line. Whomever has control of the estate has responsibility for clearing up the estate and discharging its obligations.  Obviously no assets and huge debts equals problems.

Pose then the question of the estate being unable to discharge the outstanding debts? Again depends ultimately upon value and worth but the Revenue are unlikely to walk away when the value is identifyable and recoverable elsewhere.  They have be know to trace the transfer of assets be they liquid or otherwise out of the UK and their audit trail is something else. Thus I know they can cross the channel for judgments in the UK can be xferred across here and applied here.  But that is where this response ends for this side of the pound all things are different.

 

rdgs

[Nick Trollope]

IANAL, but; I suspect that HMRC would have no claim over French property as distribution of "immovable" property is closely defined in French law. The surviving partner in with a tontine clause would inherit the property. Noone else would have a claim.

No?

 

[Llwyncelyn]

Sorry Nick an order by a Court be it in the High Court or Registry has power and can be shunted across the pond here to France.  Just because you live say in Nimes or Arles or whatever or Calais you are not immune.  As in most things you should take advice.  In the very act of posting suggests that you may well have concerns?  Nick En Tontine is not a panacea for absolute security.

[Nick Trollope]

I appreciate that (& no, I have no direct interest, just a general interest - and some experience - in commercial law). It is true to say, however, that immeubles can be and are protected from the French authorities, so I can't see the High Court having much chance.

As I say, IANAL - I just keep my eye on these things.

[SC]

Wouldn't the marriage regime determine whether the suvivor is responsible for the other's debt? (After the property is transferred)

Steve

[Will]

Not necessarily. The CU regime, for example, basically gives the surviving spouse a right to live in the marital home and defers the payment of inheritance taxes until after the death of both partners - subject to not being contested by other reserved heirs. In France couples are treated jointly for fiscal purposes, rather than as individuals, so debts are considered the couple's responsibility rather than the individual partners.

The CU marriage regime is specifically not recommended where one of the partners has a business, as it leaves the partnership responsible for business debts, and the marital home is vulnerable should the business get into difficulty. There are ways round this, but it does get quite complicated legally.

 

[SC]

The Separation de Biens regime, which a UK marriage is considered to be in France, would protect the survivor from most of the debts of the deceased though, wouldn't it?

I read that under the tontine, there will be droits de mutation to pay (7-8%, but of what?) at the transfer of the property if it is valued over roughly £50K, which could be a considerable bill if one is unprepared.

Steve

[Will]

You would need to take legal advice on that.

There are often considerable sums to pay one way or the other, Benjamin Franklin must have been thinking of French succession law when he said that nothing is certain except death and taxes (incidentally the US state of Louisiana share's France's Napoleonic code where ingeritance is concerned).

[ricci61]

Hi,

Just to complicate matters further - Does anyone know if someone declares bankruptcy in UK ( for UK debts, loans and credit cards) if a property in France, bought in 2004, would be included and attached.  Would there be any difference if the house was a primary residence.( They no longer own property in UK)  I ask because someone said that a house in France does not 'belong' to Mum and Dad but is legally partly owned by the children as part of their inheritance and therefore could not be sold without their permission.

Many thanks to all those knowledgable people out there!

Ricci

 

[Sunday Driver]

According to the UK Insolvency Service, if you are declared bankrupt, then you have to disclose all of your assets (including property, pensions, insurance policies, etc) to the receiver.  Where the home is co-owned, the debtor’s interest can still be realised, but a right of occupation period of twelve months is allowed for the disposal of the property if a co-owner, family or dependents of the debtor occupy it. At the end of the twelve-month period, the property will almost certainly have to be put up for sale, enforced by a Court order if necessary.

In French law, a child's inheritance is protected by the law of succession which only applies once one of the parents dies. Until then, the parents are free to sell their property without their childrens' prior consent.

 

 

[lacote0_0]

My knowledge of tontines is based largely on the exploits of Peter

Cooke, Dudley Moore, Tony Hancock and others in the film The Wrong Box,

but is not the essence of the tontine that the underlying asset passes

directly to the survivor, rather like  a life insurance policy with a 

named beneficiary?

According to the fisc, "....le bénéficiaire de la clause de tontine est réputé

propriétaire de la totalité de l'immeuble depuis la date d'acquisition

effectuée en commun..."

The asset will therefore pass by operation of law outside the

succession (although droits de succession are still payable), and will

not normally be available to creditors.

However, there would no doubt be circumstances in which the creation of

the tontine could be set aside. English creditors could then enforce

their claims on the French asset.

[Teamedup]

Tontine thresholds are quite low too.