La Communaute Universelle (marriage contract)

[Lavenderlady]

I'm really sorry, but I'm not going to have time to translate the document for you at the moment... tomorrow is my last day at work (and therefore on computer) before we go to France for a week to get the keys and it's all a bit hectic. Sorry about that, I'll try and do it when we get back.

Otherwise everything I've read on this thread seems correct to me: changing to Communauté Universelle would appear better than Tontine for tax purposes. We hope to discuss it further with the notaire next week so I'll let you all know if anything else comes to light.

Get our 100 square metres of La Belle France in ONE WEEK'S TIME!

[WJT]

Hi Lavenderlady, all very exciting, I wish you all the best. Let us know how you get on.

WJT (was Frenchy, had to re-register because of a problem)

[Renaud]

The communauté universelle is a sort of post-nuptial agreement through which couples jointly own their property and can specify that, after the first death, the surviving spouse inherits the property without having to share ownership with the children or paying any inheritance tax. The children inherit after the second death and pay inheritance tax.

However it seems to apply best to couples who are married, where neither have been married before and do not have any children outside of their marriage.

Ideally the notaire can organise it to be signed at the same time as the Acte de Vente. The notaire who re-married us under this arrangement, wanted to be sure that we understood the implications. When his English and our French ran out, he whizzed off to reappear with a stat of an article in French Property News (April 2004).

[SaligoBay]

Now that I've got over my last little panic about our house move being delayed, I feel at liberty to have another panic now.

The acte finale should be October 18th, and the notaire has sent us a note of what we have to provide on that day, which is basically a load of dosh, to be shared between the vendors, the estate agent, and - spit - him.

There has been no mention of marriage contracts or anything else.  Only money!

Is the salopard going to just land this one on us on the night with no warning?  He's already sent us someone else's financial details and forgotten to tell the vendors that the move is delayed.....

What should I be knowing here?  

 

[Downunder]

[quote]Now that I've got over my last little panic about our house move being delayed, I feel at liberty to have another panic now. The acte finale should be October 18th, and the notaire has sent us a note...[/quote]

Good morning - A couple of questions have come to mind since reading the posts on the subject of Communaute Universelle. 

l.  What happens if the surviving spouse wants to sell up and leave France?  Does it then revert back to the original problem of children inheriting and the surviving spouse/children paying inheritance tax?

2. If renting instead of owning a property would this still be the way to go? 

[Downunder]

:blushardon! My questions re the marriage contract are in the wrong box. 

[WJT]

[quote]Now that I've got over my last little panic about our house move being delayed, I feel at liberty to have another panic now. The acte finale should be October 18th, and the notaire has sent us a note...[/quote]

SaligoBay, in our case if we hadn't enquired about changing our Marriage regime it would have never been brought to our attention. I would suggest if you want to have this done you will have to notify the Notaire in advance.

[Lavenderlady]

SB, I'd agree with WJT. There's no reason why the notaire would bring it to your attention, it's up to you. I emailed our notaire up front and explained our marital situation and asked for advice. He came up with the best solution for us. It cost 350 euros and we signed it the same day as the acte de vente.

[SaligoBay]

Thank you for your replies.

If we do nothing, what will our situation default to?

 

[Lavenderlady]

The way I understand it (and I'm more than happy to be corrected) is that if you do nothing, when the first spouse dies (assuming you are married) the house will not automatically pass to the surviving spouse. If the one who died has children from a current or previous marriage or even surviving parents, the house will pass to them. Previously these inheritants could chuck out the surviving spouse, but I believe the law was changed last year to allow the surviving spouse to remain in the house until they die.

If you have communauté universelle, when the first partner dies the house passes to the remaining spouse. No tax is payable. When the remaining spouse dies, the house passes to joint children or parents, or children of the spouse who died, and tax is payable.

That's how I understand it but it's very complex and someone may prefer to clarify.

SB as I know you speak French, have a read of the article I mentioned a few threads back, it explains it quite clearly and might help you through the minefield!

Just a thought though... am I right in thinking this is your second house purchase in France? If so, when you bought the first time, did you buy it 'sans contrat de mariage'? If so I'm not sure whether it will be more complex to change it at this stage... but again I'm willing to stand corrected!

[SaligoBay]

First house purchase in France, LL, we've been renting up till now.

No complications marriage-wise, bog standard UK job 1992, children 1994 and 1997, and can still get into dress too!

I'll go and read that article, thank you.

[Teamedup]

If you do nothing then, if one of you dies then their half of the house less around 10% will pass to your son. So you or husband will only own around 60% of the property. All the taxes will have to be paid, at that time too. The law changed last year and your child upon reaching majority cannot kick you out, ie reclaim their 40% of the property's value.

We have done a usufruit, which is a very basic paper that is handwritten which says that in the event of the other persons demise, that the use of the house is the remaining spouses and that if they rent it out, that they will get all the rent from the property.  I frankly have no idea what would happen if the surviving parent wanted to sell before their child was major. I realise that a poster had managed to do this, but I don't think that they had been in France for long either, and I'm fairly sure that the length of residence counts.

Re changing to a communaute universelle. Well, taking into account the amount of time you have lived here, I'm not sure if you could do it. Also, there is your son who is minor and I'm not sure if they will let you do it anyway.

All complicated and you would need to discuss this with your notaire and perhaps get advice from at least one other. There is a service of a seance with a notaire or avocat gratuit in all the major towns, usually sur rendez vous, but would offer you more information never the less.

[Charlie Nott<P>Many Thanks<P><P>Charlie Nott<P><P><a target=_blank href="http:www.giteshols.com">www.giteshols.com<A><P>]

Are you aware that this will help you avoid paying IHT (Inheritance Tax) on the value of the property when one of you die and the house passes to the other person. The rest of your estate will still be liable for IHT when the first person dies. There is a way of putting the rest of your assets into Communaute Universelle after you have been resident for at least 2 years. This needs to be performed by a UK solicitor and a notaire (and costs money to perform).

I wonder how many people that have settled over here will have to sell their house when the first person dies in a relationship just to pay the massive French IHT bill as French IHT starts at a lot lower level than UK IHT. Currently only the first 76,000 Euros is not taxable between spouses and everything over this is taxed on an increasing scale between 5 and 60%.

Also if you keep a house in the UK then the UK taxman may decide that you will pay UK IHT as well the French Tax office taking their tax on your whole estate. It is difficult getting an answer from the UK taxman on this as they will only judge it on an individual basis when you are in this position.

There is a very good document at http://www.prettys.co.uk/filemanager/download/76/Succession%20Guide.doc that is very informative. I have no relation with this company and found this document on the net.

[Richardbk]

[quote]Are you aware that this will help you avoid paying IHT (Inheritance Tax) on the value of the property when one of you die and the house passes to the other person. The rest of your estate will still...[/quote]

The amount of IHT payable in  France will also depend on the number of heirs - the more heirs the less each would pay. with a standard default marriage of 50/50 with 3  heirs and a surviving spouse the total IHT on a property of ~euro 500K is only a few 1000 euro , + their are a few other good reasons not to use a Communaute Universelle (e.g separation/divorce can be extremely difficult) -  which is is why few french people actually use it - 

Most 'active' notaires will tell you that it in most cases it is unnecessary since the 2003 law change regarding surviving spouse rights. It is only the paranoid ex-pats that seem to keep it alive !

BTW if you own a house in the UK and are resident in France your house in the UK also comes under French inheritance tax laws - as do any other world wide assets.

 

regs

 

Richard 

[Athene]

[quote]The way I understand it (and I'm more than happy to be corrected) is that if you do nothing, when the first spouse dies (assuming you are married) the house will not automatically pass to the survivin...[/quote]

Hi!

your understanding of these matters accords with mine! In our area, there is a little , old lady of 82 years who, after her husband died, had her life made so awful by her son who wanted his cut of the house (he does not live there but has a 'pavilion' down the lane!) that she was unable to gainsay him anymore and she has had to go into a paid home with another family; in law she could have stayed but in reality she had no choice, she could not tough it out any longer! I jolly well hope this would never happen to my husband or myself!

[Frenchy]

Did anyone see the article in this month's Living France "Last rights" by Prettys Solicitors? It states that the CU would not be suitable for couples that have children outside the marriage because they cannot be disinherited. It states that article 1527 of the Code Civil specifies explicitly that if this were not the case the children would be able to have the amended regime set aside where it would result in them being entirely disinherited.

We were told by our Notaire (and our useless UK Solicitor) when adopting the CU that the surviving spouse would receive the whole of the property in the case of death of the first one. They were fully aware that there were children outside the marriage. According to this article this is not the case and we just wasted time and money changing our marriage regime to CU.

Does anyone have any advise on this and where do you go from here?

By the way in regards to someone saying that this is the case of expats being paranoid, many may find this statement very hurtful. For one, today there are many such as myself that are in second marriages with children outside of the marriage that are moving to a country that the government dictates not the individual, who will own your property after your death. This is regardless of your wishes and your situation and those of your spouse. Particularly, if both are moving from a country that gives the individual the right to choose and for what ever reason may not be handed down a property from their own parents, in essence leaving them very vulnerable later in life. I personally do find the comment a bit unfair.

[Teamedup]

Frenchy, this is exactly what I understood would happen. One cannot disinherit one's kids here and they have rights. Whether we like it or not it is their RIGHT to inherit from their parents.

It is, I admit a grey area for those of us moving to France and are already married in the UK as we are married under what is more or less a communaute universelle. 

However, for those marrying specifically intending on moving to France, then french law, I have been legally advised, does apply and unless one has the children's written permission if they are major, then one cannot do a communaute universelle. Minor, and the judge would probably not allow it.

What do you do now. Well if your children are major then can't you get them to sign up in agreement.

And paranoid. Why should that be hurtful. These are french laws and we chose to live here, you can't 'half' move to France. I don't like it either, but I have to accept that it is the law of this country. And I personally do not know of one french person who would do a communatue universelle. I have mentioned it to most of my entourage and they give me very strange looks. And there is no way they would want their kids paying more to the tax man than necessary.

As it stands the law changed last year, (I think) and children cannot kick the surviving spouse out anymore. They used to be able to if people hadn't sorted their affairs out.

This has always worried me, and we have always hoped that the donation we made out, would be sufficient if either of us died.

[Richardbk]

"By the way in regards to someone saying that this is the case of expats being paranoid, many may find this statement very hurtful. For one, today there are many such as myself that are in second marriages with children outside of the marriage that are moving to a country that the government dictates not the individual, who will own your property after your death. This is regardless of your wishes and your situation and those of your spouse. Particularly, if both are moving from a country that gives the individual the right to choose and for what ever reason may not be handed down a property from their own parents, in essence leaving them very vulnerable later in life. I personally do find the comment a bit unfair"

It is not meant to sound hurtful, but it is a fact that the only people that seemed to be worried about inheritance are the foreigners that move here. On moving to another country I guess most people need to consider various aspects of living and weigh up the pros and cons. If having flexible inheritance is one of the main factors, than France is not the place to move too.  France has spent 2 centuries from maintaining a very specific set of inheritance laws and closed practically every loop hole, from company ownership through to not recognising trusts. It is quite simple - the aim is to pass inheritance through the blood line. Those that refuse to accept this and or try various ways to avoid it are simply fooling themselves.

regs

Richard

 

[Athene]

[quote]" By the way in regards to someone saying that this is the case of expats being paranoid, many may find this statement very hurtful. For one, today there are many such as myself that are in second ma...[/quote]

It is not the case that only Brits have CU! Our French neighbours have a CU too! They are second marriage and the husband has children with his first marriage but it is his understanding that their house with a CU will pass to his second wife with no tax to pay (he has no children in his second marriage) should he  die before her and when they are both dead, it will pass to his children.

[Teamedup]

I was aware that some french people do this, but no one I know would is even prepared to consider it. Also, I feel that the recent laws would protect his new wife anyway, apart from the tax aspect ofcourse. However, with regards to the CU, unless he has his kids written permission,then if he dies first, then they can take the estate to court and stake their claim, who knows whether they would win or not. It will ofcourse only take one lot of kids to win and the precendent will have been set.

[Downunder]

[quote]I was aware that some french people do this, but no one I know would is even prepared to consider it. Also, I feel that the recent laws would protect his new wife anyway, apart from the tax aspect ofc...[/quote]

When I first posted my original query re the above I felt fairly confident that this contract would suit our situation but after reading all the posts over the past weeks I'm now more confused than ever.  It isn't that important to us at present as we are not in a position to live in France at the moment anyway but it would help to feel confident we could organise our affairs satisfactorily once we're there. 

I did mention before that a French friend of ours did not receive a cracker when her father died two years ago and neither was she ever asked to sign anything prior.  She said her father and stepmother entered into the CU, which she found out only after his death.  She sought legal advice which cost her a great deal but was told she had no rights.  How does this sit with those of you who seem so confident that this is not so? There seems to be so many conflicting views which makes us nervous but it would be interesting if there had been a test case so maybe the question could be answered once and for all.  Trouble is no one case is the same. 

[Will]

Part of the process of changing the marriage regime is publishing a notice in the local press. It is significant that the vast majority of the notices in our local rag, La Manche Libre, concern people with French names, born in France. So at least in this part of the country it isn't only foreigners - perhaps there are more re-marriages here than where TU lives?

Also the effect of some of the measures intended to overcome inheritance issues is that the inheritance, and tax payable, is merely delayed (until both partners are deceased) rather than avoided altogether - I'm not sure exactly how the marraige contract works in this respect.

Our local Anglo-French association recently had a talk from a consultant and his associated French notaire on this subject, the consultant is based in the Caen area and has a web site at http://www.vgconsultants.com. His name will be recognised by those who have had dealings with Britline a couple of years or more back - I'm not sure whether or not that is a recommendation, but on balance ir probably is.

[Dordogner]

We currently own 2 houses in France, both of them purchased jointly in our current single names.  We are now planning to get married in France (as advised by the notaire). We are also resident in France.

We have now been informed that there is a large sum to pay to re-register the houses, even though we have chosen to get married under the communaute universelle regime.

I was under the impression that the houses would automatically become jointly owned due to the communaute universelle. There are no children to consider and we are unable to have children in the future.

The sum quoted by the notaire is close to 2000 euros.  Has anyone else experienced this cost?  Our notaire when we booked the appointment with her was unsure how the procedure worked and had to make enquiries.  Has she got it right?

[Jonzjob]

We took a CU contract about 3 weeks ago. We did not have to get written permission from my children...

 I have 2 children from my last mariage, both adult. If they were to challenge the CU in a French court it would cost them a LOT of money and a lot of time. The idea was not to disinherit them, but to make sure that if I go first my wife will not have to give up our home because of the tax she would have to pay on my death! If there were a chalenge then the most my children could hope for would be 2/3 of 'my' estate. If they leave well alone then they WILL inherit 2/3 of the combined estate that my wife would have and not 2/3 of 1/2, i.e. my estate

The base reason that the inheritance laws of this country are laid out as they are is historical. The corporal Napolian laid these laws so that the land would be split and there would be no large land owners to challenge his authoirty. It worked... This is how I understand it from several French friends and a lot of reading.

John.