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Inheritance Tax Liability for UK Heir


Stuart

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I am a UK resident and the sole beneficiary under my aunts Will.

My aunt is resident in France and lives in the house she owns there.

Am I right in thinking that as my aunts' nephew, I would be liable for 55% inheritance tax on her estate?

Any advice would be most appreciated.

Kind regards

Stuart

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In spite of the will, if there are other family members, then they could perhaps ask for their share under french descendant/ascendant rules.

If it is all yours, then you'd probably get a few thousand euros tax free and then I reckon it would be liable for 55% tax.

A lot isn't it, but that is just the way it is in France. For closer family members it is a lot better than it used to be.

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Yes, if you are talking about your aunt's UK Will, it will have no clout in France.

If your aunt has a husband or children anywhere, they get a predetermined share by right.

Next come her parents (if still alive), her siblings and her nephews and nieces. They do not seem to have obligatory shares, so she can opt to leave some out.

http://www.vos-droits.justice.gouv.fr/deces-succession-11957/droits-a-la-succession-droits-autres-heritiers-11985/droits-a-la-succession-des-collateraux-20353.html

(sorry I can't make the link "live", but maybe a mod might kindly do so).

Indeed, beneficiaries with your degree of closeness would seem to be subject to 55% tax. Beyond the 4th degree, it is 60%.

It does make inheriting a bit of a "cadeau empoisonné", or poisoned gift, if you have to pay 55% of the value of the house before you can get your hands on it.

it looks as if your aunt should visit a notaire and make a French Will specifically in your favour, if she has no husband or children.

EDIT i mean that, if it is her wish to leave it all to you, and in the absence of any first-degree inheritors, this would clarify things as far as French inheritance is concerned.

I did this not long ago, and it cost a nominal amount to do.

Angela
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Out of interest, we are going through a similiar situation with an elderly friend who has an estranged adopted daughter and two step children. The estranged is free and clear, the two closer step children (actually 50 year old adults) pay 60%! The only two options we can see is to sell the house now and give the money to UK step children, or to go down the route of " rente viagère". Both routes need the estranged permission. There is, for the OP, the choice of refusing the house (not so stupid of they don't have the money to pay the tax/house is unsalable).

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[quote user="Stuart"]

I am a UK resident and the sole beneficiary under my aunts Will.

My aunt is resident in France and lives in the house she owns there.

Am I right in thinking that as my aunts' nephew, I would be liable for 55% inheritance tax on her estate?

Any advice would be most appreciated.

Kind regards

Stuart

[/quote]

After a tax-free allowance of  7 967€ the rate is 55%.

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[quote user="parsnips"][quote user="Stuart"]

I am a UK resident and the sole beneficiary under my aunts Will.

My aunt is resident in France and lives in the house she owns there.

Am I right in thinking that as my aunts' nephew, I would be liable for 55% inheritance tax on her estate?

Any advice would be most appreciated.

Kind regards

Stuart

[/quote]

After a tax-free allowance of  7 967€ the rate is 55%.

[/quote]

And IIRC, you are required to pay the tax up front, before you can get your hands on the property to sell it. Some banks used to provide bridging loans for this purpose.

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I believe you have six months from the time your aunt dies to either renounce your inheritance, or declare it and pay the tax in full. But in practice, normally you can arrange with the fisc to pay the tax by instalments if it's high, although you would of course pay interest, but not totally sure you could do that if you don't live in France.

And as pointed out, regardless of what the will says, if your aunt has children of her own then French succession law does not allow her to disinherit them in your favour. It's possible that you will be required to prove there are no direct descendants before the notaire will process the succession. Possibly it would help if your aunt makes a formal legal declaration of this in front of the notaire, if she hasn't already.

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[quote user="EuroTrash"]It's possible that you will be required to prove there are no direct descendants before the notaire will process the succession. Possibly it would help if your aunt makes a formal legal declaration of this in front of the notaire, if she hasn't already.[/quote]

I know that the aunt is still alive according to the OP, but I couldn't help having visions of exhuming the body and holding officially-recorded seances in an attempt to get a statement or evidence from the dead body that there weren't any offspring ...

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LOL

haven't you heard of Waking the Dead.?

I was of course suggesting that Aunt does this before she goes to meet her maker,,but should she not do so, I'm sure the notaires would settle for searches being done by legal bods in the UK who specialise in this kind of thing. I don't think the OP needs to worry about exhumation. French law has some odd requirements but none quite that odd.
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The notaire dealing with my husband's death wanted to contact our UK solicitor to check that my husband did not have more children than the ones I had told him about. As "our" solicitor was simply a big London practice that we had only fairly recently visited for the first time to make our UK Wills, I suggested that they would not have been able to do that easily, quickly or cheaply.

The notaire seemed surprised that we would not have a solicitor who would have known our family for generations, but eventually agreed that he would accept the word of a couple of old friends who lived locally to us in France, if they would agree to come and sign to the effect that as far as they were aware there were no other children.

Angela
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Not sure if I'm adding anything of great substance but here is one case that I know about.

A friend of ours, a nephew, inherited a flat and a boat in Villefranche sur Mer (I think that's the location but it's many years ago).  He had to sell the boat and its mooring in order to pay the taxes.  As someone has pointed out, you need to pay the taxes before you can take possession.

There was a very sad coda to this story.  He sold the boat to a good friend and, subsequently, the friend had a horrendous fire on the boat in which he was killed and only his teenage daughter survived with multiple burns.

Might be something to be said for refusing to inherit..........[:'(]

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Fixed assets are treated differently from the rest of a person's estate..

If it was that easy, why would anybody ever pay succession tax ;)

AFAIK the only way fixed assets (i.e. immobilier) can become 'non fixed' as it were, is to set up an SCI, which is what some people to do to avoid inheritance issues. The property is then owned by a company, and a company is not a fixed asset/immobilier, so shares in the company and therefore shares in the property can be handed on after a shareholder's death without succession taxes applying.
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That a person of ordinary means should be required to pay tax at a confiscatory rate of 55% or 60% is self-evidently unjust and discriminatory.  You should leave no stone unturned to avoid paying this excessive imposition.

I am in the reverse position, in that any bequest that I might make will be milked to the tune of 60%. 

In a casual conversation with my notaire I expressed my repugnance at this situation, and he immediately reeled off a number of ways in which this punitive payment could be avoided or mitigated.   

One, I have to admit, caused laughter ;  another took be completely by surprise as it revealed a possibility that I simply had not realized existed.  There were at least two which seemed to be potential runners, and which I am actively considering.  (It is pointless to go into them here, as they might well not suit your particular situation.)

I strongly urge you to consult a sharp and imaginative notaire.

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[quote user="Gengulphus"]That a person of ordinary means should be required to pay tax at a confiscatory rate of 55% or 60% is self-evidently unjust and discriminatory.  You should leave no stone unturned to avoid paying this excessive imposition.

I am in the reverse position, in that any bequest that I might make will be milked to the tune of 60%. 

In a casual conversation with my notaire I expressed my repugnance at this situation, and he immediately reeled off a number of ways in which this punitive payment could be avoided or mitigated.   

One, I have to admit, caused laughter ;  another took be completely by surprise as it revealed a possibility that I simply had not realized existed.  There were at least two which seemed to be potential runners, and which I am actively considering.  (It is pointless to go into them here, as they might well not suit your particular situation.)

I strongly urge you to consult a sharp and imaginative notaire.



[/quote]

 

Oh do go into them - please [blink] - even if it just a summary and we can then do our own research, it may help other readers . . .

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[quote user="tinabee"]

[quote user="Gengulphus"]That a person of ordinary means should be required to pay tax at a confiscatory rate of 55% or 60% is self-evidently unjust and discriminatory.  You should leave no stone unturned to avoid paying this excessive imposition.

I am in the reverse position, in that any bequest that I might make will be milked to the tune of 60%. 

In a casual conversation with my notaire I expressed my repugnance at this situation, and he immediately reeled off a number of ways in which this punitive payment could be avoided or mitigated.   

One, I have to admit, caused laughter ;  another took be completely by surprise as it revealed a possibility that I simply had not realized existed.  There were at least two which seemed to be potential runners, and which I am actively considering.  (It is pointless to go into them here, as they might well not suit your particular situation.)

I strongly urge you to consult a sharp and imaginative notaire.

[/quote]

 

Oh do go into them - please [blink] - even if it just a summary and we can then do our own research, it may help other readers . . .

[/quote]

Yes, go on. You'd be surprised how pointless it isn't.

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Sharp and imaginative Notaire.

Thin on the ground in France, the one I know could better be described as bent as a nine bob note (in the financial not sexual sense) but he was struck off after an investment scandal, he has since taken his exams again and is once more allowed to practice.

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