Why we are NOT buying in France

[Tourangelle]

[quote user="Phil the Francophile"][quote user="Tourangelle"][quote user="Quillan"]

I spoke to a person I know this afternoon who's wife died at Christmas here in France. To confirm what I thought and Tourangelle said he can live in the house till he dies or rent it out and rent a smaller one and keep the difference. He has had to pay no tax or anything else. He has been told the same as what I read (in the LF magazine) that if he sells the house he must pass over his wifes share to her children as it was their second marriage and they both had children by their first marriages but none between them.

Taking the above in to account I think this is down quite simply to the fact that the original poster is not and will not get married so obviously he will be in a different position. Before the law changed one way was to legally adopt your step children if you were married and then put a tontin clause in.

[/quote]

Quillian, glad you posted this, since my last post I've been talking about this to my (French) family, and the general concensus was that the marriage made all the difference!

[/quote]

Without wishing to protract this I am not sure what is being said here. I have never said I would not get married, indeed I have referred elsewhere in this thread to the communaute universelle which is only available to married couples. In the case of a communaute universelle, then no IHT is payable. However, a communaute universelle is open to attack by stepchildren as French courts can decide that having such an arrangement is a deliberate attempt to disinherit those step-children. This is called the action en retranchement and is a right available to step-children, but does not need to be exercised. Beware!!

[/quote]

You appeared to be suggesting, and both Quillian and I clearly understood this the same way, that children would have to be paid compensation if the surviving spouse took the usufruct of the house.  However it would seem that this does not apply when the couple is married, and certainly not, in my example where the only children involved are those of the marriage. I am pretty sure nobody was suggesting that the communauté universelle was available to anybody other than people who are, or who are planning to get married, as it is a marriage contract.

[Phil the Francophile]

I was indeed suggesting that taking the usufruct in an indivision ownership requires the taker of the usufruct to compensate the other inheritors, at least in theory. There is a sliding scale of the value of usufruct, and as I have also previously said I would get to 81 before I didn't owe anything to anyone else for staying put.

I am sure you are well aware that it is possible for married couples to puchase indivision which is the French standard. In that case, the surviving partner is entitled to exercise a right to stay on in the property, the usufruct. But as I have said earlier in the thread, this has a value and will be assessed. For example. A widow, with 2 children and having purchased indivision and aged between 51 and 61 would inherit 1 third of the proportion of the property owned by her late husband. The value of the usufruct between the ages of 51 and 61 is 50%, in the case I quoted the widow is entitled to 33%. She would have to make up the shortfall in loss of inheritance, ie 17% of the proportion of the value of the property that was owned by her husband.

That is the theory. In reality the exercising of the usufruct negates the need to actually pay out any compensation unless the other inheritors insist on being paid, which they are entitled to do.

The communaute universelle sidesteps that neatly, but is then open to other attacks.

I think everyone has got my general drift now, and that is that every way you turn there is a potential for someone else to take control of your life, and I am not having that!

 

[Quillan]

I was talking to my friend again yesterday, one has to be a little tactful as you can imagine.

In his case we are talking about a UK marriage, step children and the fact he is tax resident in France and declares his French house as his primary home. He has not adopted his wifes children and neither did she his. The Notair has divided up the property and furniture (which is also counted, valued and thrown in to the pot). I won't repeat what I have already said other than to say he has to pay nothing. His wifes children have 'gifted' the furniture back to him. This is not a legal thing it's just they are not interested in anything other than a few bits and bobs to remind them of their mother. Thats what has happened to this guy in real life (no dig intended to anyone) and it seems to me there are others in the same boat.

In fairness I think anyone concerned should see a French lawyer (as already said) BUT don't take what they say as always being correct as it has been known that they are not always aware of new, recent laws or changes to the law. Notairs can be just as bad. There really are to many parameters that can change things to make general statements but I can only quote on the one I know about and his specific situation. All I know is I am in the same boat as my friend with a step daughter, I'm tax resident, it's my main residence and I know I can't be forced out of my house if my wife dies and I won't pay tax which is all I really need to know for myself. Once I die (after Mrs Q) I really don't give a toss who gets my share.

[Wendy]

Obviously its simple. If you dont like your kids, or your partners kids, then dont buy a property in France. Isnt it amazing how bloody-minded families are when it comes to Wills?.

[Phil the Francophile]

[quote user="Quillan"]

I was talking to my friend again yesterday, one has to be a little tactful as you can imagine.

In his case we are talking about a UK marriage, step children and the fact he is tax resident in France and declares his French house as his primary home. He has not adopted his wifes children and neither did she his. The Notair has divided up the property and furniture (which is also counted, valued and thrown in to the pot). I won't repeat what I have already said other than to say he has to pay nothing. His wifes children have 'gifted' the furniture back to him. This is not a legal thing it's just they are not interested in anything other than a few bits and bobs to remind them of their mother. Thats what has happened to this guy in real life (no dig intended to anyone) and it seems to me there are others in the same boat.

In fairness I think anyone concerned should see a French lawyer (as already said) BUT don't take what they say as always being correct as it has been known that they are not always aware of new, recent laws or changes to the law. Notairs can be just as bad. There really are to many parameters that can change things to make general statements but I can only quote on the one I know about and his specific situation. All I know is I am in the same boat as my friend with a step daughter, I'm tax resident, it's my main residence and I know I can't be forced out of my house if my wife dies and I won't pay tax which is all I really need to know for myself. Once I die (after Mrs Q) I really don't give a toss who gets my share.

[/quote]

I couldn't agree more Quillan. What I have been quoting is the letter of the law. Notaire's do interpret the law, and they will all do so in their own inimitable fashion. From my perspective I feel it is at least sensible to know what the worst case scenario is, even if it never happens.

It is true that Notaires in general are finding they are doing more to earn their money when foreigners are involved. It is reassuring to know we are not the only ones in this boat. There is a large Dutch contingent living (or trying to live) in the Gard, and they seem to have just as many problems as we do.

[suzy]

I don't think it's a question of liking the kids, Wen.  It's my money and my kids inheritance which is buying our French property, my partner's kids have no interest in it and are well provided for elsewhere.  We'd have liked to get married eventually, but won't because of the inheritance laws.

 

Suzy

[Quillan]

[quote user="Phil the Francophile"][quote user="Quillan"]

I was talking to my friend again yesterday, one has to be a little tactful as you can imagine.

SNIP

[/quote]

I couldn't agree more Quillan. What I have been quoting is the letter of the law.

SNIP

[/quote]

As known and understood by the person who told you. It always seems to take a while for the French to get to grips with new laws, the removal of the requirment to have a CDS took about a year to cycle through all the departments (both geographical and fiscal) as has the change in law about having 6 years to pay capital gains tax which came out in Jan 2005 plus the bit about kids not being able to throw their parents out of the house if one of them (parents) died. The forum in the last 5 years I have used it is lettered with these sort of things. Another was when they gave people 14 days to get out of a house contract, even our agent didn't know about that and we had to show the copy of LF that explained it.

I think the best way is to speak to the notaire you intend to use then if it all goes T1T's up you can go back to him and do something about it. Of course don't forget to do everything by letter even when on a face to face follow up with a letter asking for confirmation on what was said.

[Espresso]

Although I feel a bit like I've been through a maze and every route I tried was blocked in some way, I did get one tidbit of advice that doesn't seem to have been discussed fully here. Some people consider life assurance is a good way to set aside money for the payment of IHT. I was told that, although you can do whatever you choose, this is a fairly extreme course of action, since the life assurance payout is tax free (if the surviving partner is the beneficiary) and you are using it to pay tax...

[Pads]

hello suze

What did you mean by usufruit? and what do you have to do to put this in your will? many thanks 

[Llwyncelyn]

It seems to me that it is a unique preoccupation and indeed historical situation for people of the United Kingdom to be judged upon what  their worth was upon death.  Then for those who have such an interest to chat amongst themselves as to the value of the estate and to comment upon 'what a good chap and I did not think he was worth that much!' and then to compare the tributes either in the Times or the Telegraph.

In our case it is the second marriage for both parties with my not having children but my wife having two children.

Whilst we were able to purchase a property in the UK prior to leaving the UK and which is destined for my wife's children the house in France is ours and ours alone and to enjoy during our lifetime.

Our house in France was funded from commuting some of our pensions to capital  and represented well over eighty years of joint work to achieve.

My wife and I have taken as sensible precautions as we thought fit at the time but have adopted an approach that we love France we love its lifestyle we get on well with the people and have followed the French who look at a house as a place to spend one's life and not necessarily as an investment.

The original contributor seemingly has overlooked the fact that there a quite a number of ex-pats here in France but they too have made the quantum jump and it is a fact that not all of them qualify for the stereotype Brit with one marriage two and a half children and a Volvo. 

I used to have a Volvo but now have a left hand drive car.  Should I too have gone into some much depth over that purchase as our original contributor suggests we should have on the house purchase.

 

 

 

[toni]

Have just come across an interesting article on the whole inheiritance issue which may be of some help.

http://www.frenchentree-property/displayarticle.asp?id=14997

[fulcrum]

[quote user="Llwyncelyn"]

Should I too have gone into some much depth over that purchase as our original contributor suggests we should have on the house purchase.

[/quote]

My thoughts were that the original poster was trying to show off his intimate grasp of inheritance laws in France and not about not buying in France because of them.

Like you, I bought here because I love the place and like living. I don't think much about dying or Volvos.

[Debra]

[quote user="Phil the Francophile"] Don't forget too that we are not just talking about the house. The Inheritance laws apply to all property. If you do not have a communaute universelle then all bank accounts, savings, furniture and anything else is deemed to be part of the inheritance, and therefore taxable.

I hope your Cayman Islands account is well hidden, as this applies to world-wide assets.

[/quote]My understanding is that the reserved inheritor laws only apply to immovable property (ie land and houses) and NOT the rest of your property as stated above.

[quote user="Phil the Francophile"]

The point I was making is in the above text, copied below:

Charge against ownership rights received

If the spouse requests it, the value of this lifelong accommodation right and right to use the furniture is deducted from the other rights received from the estate, particularly in the presence of children, from the owned quarter reverting to him/her. If the value of these rights is less than that of his/her inheritance rights the spouse may take the rest from the existing assets. If the opposite is true, he/she shall not be bound to indemnify the estate.

The usufruct has a value, and must be paid for.

[/quote]I think Phil is missing the point from this text, which is If the value of these rights is less than that of his/her inheritance rights the spouse may take the rest from the existing assets. If the opposite is true, he/she shall not be bound to indemnify the estate.

The usufruct doesn't have to be paid for if it exceeds the spouse's usual entitlement.

[WJT]

[quote user="Llwyncelyn"]

 

I used to have a Volvo but now have a left hand drive car.  Should I too have gone into some much depth over that purchase as our original contributor suggests we should have on the house purchase.

[/quote]

Good for you [Www]. But I think you are being very unfair, for one, I assume you are of a very ripe age of which could have a bearing on how one feels about their life in France or the balance of their life or of their spouse if the worst were to happen. Second, everyone's situation is different, just because you do not need the security or you feel comfortable living with the unknown about the future or it being in the hands of someone else then again good for you. But perhaps you shouldn't be so judgmental of others that have concerns about the way the rest of their life will be handled and dictated by a government.

I for one am very pleased that the original poster started this thread and have learned a few things myself but if it helps just one person to avoid the extra heartache at one of the worst times in a person's life, I say well done. For those that want to jump in blind or just do not worry about their future life in rural France at the hands of others, then perhaps just don't read threads such as these that are informative on the matter. I can imagine how the original poster feels about giving up on their dream and hope that they find a solution.

[Catalpa]

[quote user="Llwyncelyn"]

It seems to me that it is a unique preoccupation and indeed historical situation for people of the United Kingdom to be judged upon what  their worth was upon death.  << snip >>

Whilst we were able to purchase a property in the UK prior to leaving the UK and which is destined for my wife's children the house in France is ours and ours alone and to enjoy during our lifetime.

[/quote]

I think you've thoroughly misinterpreted the original purpose of sharing the information in the first post. It was to highlight the fact that on the death of a partner (married or not) any children from either that or previous marriages obtain rights on property owned in France. If you, Llwyncelyn, are a French resident, what property you've made available to your wife's children in the UK is irrelevant: under French law, the surviving partner's rights, to an extent, pass into the hands of both the French government and those children. There's no point me recapping the varied - potentially undesirable - outcomes that could have. That was covered comprehensively in the first few pages.

Sharing that detailed information openly - and the effect it has had on their plans - was the purpose of this thread. And plenty of people seem to have found it valuable and of relevance to them.

At no point in the discussion did I see indications of Volvo's being driven or even a preoccupation with money. The preoccupation with remaining in charge of one's destiny was the point. And if that's a particularly unique preoccupation... of the people of the United Kingdom then good for us.

[Quillan]

[quote user="toni"]

Have just come across an interesting article on the whole inheiritance issue which may be of some help.

http://www.frenchentree-property/displayarticle.asp?id=14997

[/quote]

This link does not appear to work.

[Catalpa]

It may have been this one:

http://www.frenchentree.com/france-tax-advice/DisplayArticle.asp?ID=2335

 

edited to make link clickable - hope thats OK ?

[scalehill]

You're not a risk-taker are you ?

I'm assuming your caution is based on the fact that you are planning to make a sizeable investment, and is therefore understandable. The family scenario you outline is similar to mine, but I'm not really going to change my life wants, or lose sleep, over a net investment of under £25,000. In your situation, if the primary desire was to move to France, I'd split the finances into two, and buy two houses, one each. One to live in, one to rent out. Inhertitance, spousal security, investment and, most importantly, karma dealt with at a stroke, without being scared off by the law.

[WJT]

Unfortunately Scalehill, I believe if you live in France, the house you are renting out would be subject to French Inheritance rules. In fact your worldwide possessions and money. Therefore you really are not able to decide what happens to them at the time of your death or of your spouse, so no reason to try and find a property at such a low cost here in France.

[Debra]

er - what I read scalehill as saying was that the couple should buy a house each and live in one and rent the other out.  This way, only the house owned by the first to go would be split between the kids of the first to go and the survivor would be left with their own house, which would in turn be left to their kids. 

Why do people keep saying that worldwide possessions and money come under the reserved inheritor rules?  I mentioned earlier in the thread that it is only immovable property such as houses and land which comes under these rules - not other property and money.  I'm certain about this so if I am incorrect, will someone please point it out to me??!!

[WJT]

Sorry, I didn't realize that is what Scalehill meant, my mistake and of course that would make sense.

It is my understanding that if you are a permanent resident in France than all worldwide assets would be included; if a UK resident than just the French assets would apply. If this is not true than I too would be interested to learn otherwise.

[Debra]

I thought immoveable assets were included under French inheritance law if you were resident in France (ie including a UK house) but I thought moveable assets weren't.  A quick search on the notaires site found the quote below, but it is only referring to UK people buying in France but remaining resident in the UK, in which case only immoveable assets are affected by French law.  Now I'm wondering if I've read something along these lines and assumed incorrectly that only immoveable assets are treated in this way - I'm looking now to see if I can find how they're treated if you live in France.

French and English inheritance law

French private international law contains a double rule in terms of inheritance : the law of the deceased's domicile in respect of moveable assets and the law of the location of the property in respect of immoveable assets. The same rule of conflicting laws is admitted in England.
The purchase of a property located in France will entail the application of French law to the conveyance of that property and, in some cases, can break the unity of the estate. The purchase of a moveable asset will keep this new asset within the whole of the inheritance governed by the law of the deceased's domicile. The purchaser must be informed of the fate of that property in his future estate in the deed of purchase.

[Debra]

Now I'm even more confused, because I thought our UK house would come under French inheritance laws if we were resident in France, but not according to this article, either now or when the new treaty comes out: http://www.frenchentree.com/fe-legal/DisplayArticle.asp?ID=842 and this one seems to say the opposite of what I thought http://www.frenchentree.com/fe-property/DisplayArticle.asp?ID=14997 in that it's your worldwide assets that come under French inheritance law but NOT non French real estate.

[Debra]

Yep - I've read a few articles now and what I thought was true (ie only immovable assets come under French inheritance law) is only true if you are not French resident.  If you are French resident then it's the opposite to what I thought - everything comes under French law (including a 50/50 split on joint bank accounts whether in the UK or France) except immoveable assets (real estate) which still come under the inheritance laws of the country in which they are situated (which I'm actually quite relieved about).

Sorry I got this wrong folks - probably because I last looked into it when we bought our properties in France as holiday properties and haven't looked at it in detail since we've planned to move over permanently (when a radical rethink about how we bought the property is necessary because of our complicated family situation).  I just thought we'd sort it out along with our wills when we moved!  Need to have a think about whether this makes a difference to what we are planning to do.......(when I find a bit more energy - it's too hot for this!!)