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House buying legals using Tontine clause


Dan Chase

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Hi All,

My partner and I are looking for a house a la Francais and I have a question:

We are not married and have no pacs or civil partnership - neither of us have children either.  When we start signing documents we want the property to be in both our names - I had heard via the grapevine that having a Tontine contract drawn up is the best way to go about this - any thoughts on how best to proceed?

 

Thanks, Dan.

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It will depend on how you wish the property be inherited upon one's death. You may wish to consider a Societe Civile Immobiliere which is similar to a corporation (see the FrenchTips on my website at www.afrenchlife.com for more details).
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[quote user="Dan Chase"]

Hi All,

My partner and I are looking for a house a la Francais and I have a question:

We are not married and have no pacs or civil partnership - neither of us have children either.  When we start signing documents we want the property to be in both our names - I had heard via the grapevine that having a Tontine contract drawn up is the best way to go about this - any thoughts on how best to proceed?

 

Thanks, Dan.

[/quote]

Hi,

   The tontine is easy to set up--you have it inserted in the contract at "compromis de vente" stage, but you should be aware that the survivor will be charged inheritance tax at 60% on their share at succession. This is the case in whichever way you buy jointly. There is a complicated method using mutual usufruits ,which must be set up by a specialist lawyer, but your best bet is either to marry (if you are of opposite sexes) or enter into a PACS before signing for the purchase under tontine , which would relieve the survivor of all inheritance tax. 

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The tontine works as a technicality ... if one of you dies, the other is able to inherit as thought the deceased had never owned it at all. That gets around the inheritance issues that many home owners want.

However, it's right that the survivor is then taxed on the share that comes to them as it is 60% I believe. However, paying that tax and staying in the family home may be better than having your partner's half of the home pass to their parents and siblings.

Difficult choice, France is still very pro-family so this is a well known choice to get around those complex inheritances. However, it must be inserted at the 'compromis' stage so make sure your notaire and estate agent put this in and make sure they point out to you, and underline for your further reference, exactly where this clause exists in the contract, as it cannot be inserted after the sale. There's many variants of wording for the tontine but a notaire will be happy to explain this to you.
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[quote user="Stan Streason"]Whoa whoa whoa here and lets back up a minute.

My wife and I buy our house en tontine out of (my earned but) joint savings, she dies and I have to pay 60% to the tax authorities (presumably 30% of the value) to get my own house back?

Sounds like a quiet under patio burial to me.[/quote]

Hi,

      No! Your wife is exempt from all inheritance tax on your estate including the house.

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Parsnips quotes:

Hi,

   The tontine is easy to set up--you have it inserted in the contract at "compromis de vente" stage, but you should be aware that the survivor will be charged inheritance tax at 60% on their share at succession.

Hi,

      No! Your wife is exempt from all inheritance tax on your estate including the house.

Is'nt this contradictory ?

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Just to clarify:

a tontine between husband and wife means that children and parents, etc., cannot inherit and the survivor doesn't pay tax.

a tontine between unmarried couples also disinherits children and parents, but the survivor pays tax.

Therefore, the moral is: get married if you don't want to pay the tax.

The benefit of the tontine is that French inheritance law must include children, even if you have nothing to do with them, or they are your partners', etc. Second marriages mean that many couples have separate children who have automatic inheritance rights, but the couple wish the surviving partner to inherit everything without the deceased's children coming in and claiming a share. So the tontine works fine in this case - if you're married then there's no tax, but unmarried then you pay the tax. So you have to work out if the tax you might pay is worse than the half of the house you might lose ...
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