Inheritance Tax – Am I correct here????

[ebaynut]

I have read the Forum, Living France and many books, and feel that the following example, for which I have used round figures, and a simple situation, is how French Inheritance Tax (F.I.T) works, can someone confirm if this is indeed correct.

 

A married couple (no previous marriages), with two adult children of their own with a total estate valued at €600K.

 

If nothing is altered, or marriage contract changed, then under French law, when the first of the couple dies, then half of the estate (i.e. €300K) would be subject to F.I.T. Of this €300K, it would be divided, giving each child, and the surviving spouse a third share each (i.e. €100K). They would have an allowance of €50K on the estate split between them, plus their own personal allowance, and the remaining amount would be subject to having to pay F.I.T.

 

The property would then be owned two thirds by the surviving spouse (€400K), and a sixth each by the children (€100K each).

 

The children could then sign somewhere (not sure where!) that the surviving spouse could stay at the property for the remainder of their life. Upon the death of the second spouse, the remaining inheritance, of two thirds (i.e. €400K) would be divided between the two children, and F.I.T would then be payable on that amount, less the €50K general allowance, and their personal allowances.

 

Is this scenario for this situation correct?

 

The other scenario is if a ‘communite de biens’ was inserted at the time of the purchase of the property, then on the death of the first spouse, the entire estate would transfer to the second spouse for a registration fee of 1% (Is this fee of 1% of the entire estate value, or just the half of the estate being transferred, i.e. 1% of €600K or €300K). Then on the death of the second spouse, all of the estate inheritance of €600K would at this point go to the two children, who would then have to pay F.I.T on it, less the €50K allowance and their own personal allowances.

 

The other questions I have on this subject are in relation to when these taxes have to be paid.

 

In the first scenario, if the second spouse remains in the house, would the children and the spouse have to find the due taxes to save the house being sold at this point, or is there a possibility of delaying these payments until the death of the second spouse? If the payments can be delayed, does the F.I.T department add interest to the due amount?

 

Any advice or comments would be very much appreciated.

 

Also, as a point of interest, how and who decides the value of the estate. Does the F.I.T  department send in a valuer at the time of each of the deaths, or is it based on self assessment?

 

Hope someone can advise on this,

Thanks.

 

[Debra]

The two children get two thirds of the estate between them but the spouse only gets a quarter, is my understanding. For the spouse to get more there has to be a will giving the remainder of the 'free' portion (ie the 'free' portion not due to reserved inheritors) to that spouse.  The spouse can choose to take a usufruit instead of the quarter.  I believe I posted extensively on this subject once from the French notaires site, and it was posted in one of the 'sticky' type sections of the forum. 

edit: yep - found it in this section just above this posting! here: http://www.completefrance.com/cs/forums/641727/ShowPost.aspx