Inheritance Law and Implications of UK Domicile Rules.

[Lrm]

My wife and I are addressing the issue of French wills. We both have UK wills but, since we are resident in France, we think it prudent to write French wills also. The rules appear to indicate that there is considerable scope for conflict between the French and UK authorities. As I understand it, the French do not appear to make the distinction of 'domicile' but determine liability according to 'residence'. The UK government on the other hand would seek to subject to UK IHT the global assets of anyone holding a UK domicile. Furthermore, a UK domicile is assumed unless a formal declaration to the contrary is made.

Does anyone have any experience of how these conflicts are resolved in practise? On a seperate note, does anyone know of any hidden consequences of changing ones domicile and, if, for example, a UK domicile were 'renounced', can it be regained?

[Hedgie]

French law govens the passing on death of real estate  regardless of your domicile status. So the forced heirship rules cannot be ducked just because you are domiciled in England.

[Will]

Immovable property is indeed governed by French succession law if you are French resident. And because, as the original post said, the French have a rather different idea of the distinction between residence and domicile, the treatment of movable assets, or immovable assets outside France, is a rather grey area, where, if you can prove you are domiciled (tax-wise) in Britain, you could argue that anything other than immovable assets in France should come under UK succession law. And as a general rule, to give up UK domicile, you have to sever all ties with Britain.

[allanb]

[quote user="Will"]...as the original post said, the French have a rather different idea of the distinction between residence and domicile...[/quote]

I believe it's correct to go even further than that and say that the British fiscal distinction between "residence" and "domicile" just doesn't exist in France.  I've seen several texts in which they are used interchangeably, as far as I can see.  Here's an example (from droit-finances.net):

Les personnes ayant leur résidence fiscale en France sont imposables sur la totalité de leurs revenus, quelle qu'en soit la source et même s'ils proviennent de l'étranger. Les non-résidents ne sont imposés que sur leurs revenus de source française. Compte tenu de la définition très large de la résidence fiscale, le statut de « non-résident » est très difficile à obtenir.

Sont considérées comme ayant leur domicile fiscal en France :

Les personnes qui ont leur foyer ou leur lieu de séjour principal en France.  Il s'agit de la résidence habituelle de la personne ou de sa famille (enfant et conjoint).

(etc)

But I would be glad to know more about the UK question.  My wife and I have not lived in the UK (nor owned anything there except a small bank account) for more than 30 years, although I do receive the UK state pension.  

A long time ago I was advised, informally, that as long as we declared residence in another country, and complied with all the rules there, it would be unlikely that we would be treated as domiciled in the UK.  But I don't have this in writing, and we have never made any "formal declaration" as mentioned by the OP.

Have we "severed all ties"?  Should we do something positive, or let sleeping dogs lie?  All opinions welcome.

[Hedgie]

[quote user="Will"]Immovable property is indeed governed by French succession law if you are French resident. And because, as the original post said, the French have a rather different idea of the distinction between residence and domicile, the treatment of movable assets, or immovable assets outside France, is a rather grey area, where, if you can prove you are domiciled (tax-wise) in Britain, you could argue that anything other than immovable assets in France should come under UK succession law. And as a general rule, to give up UK domicile, you have to sever all ties with Britain.[/quote]

 

Immoveable property in France is governed by French forced heirship rules regardless of whether you are resident in France.

Inheritance tax is a completely separate subject of course

[Will]

The words were carefully chosen to accommodate vehicles like the SCI, which is often used by non-residents (but which does not apply to residents) to get round certain aspects of French succession law.

I agree that as a general principle, unless you have taken specific steps, then any fixed property in France is governed by French law, and that tax is a separate issue - but inextricably linked. The best counsel is always to take the advice of a qualified profesional if inheritance or taxation issues are important to you. Thanks for the clarification.

 

[andyh4]

If you do opt for both UK and French wills, be very, very certain that they do not contrdict one another in even the smallest way - unless you want your inheritance to fund the respective legal professions in both countreis.