Rights of succession

[loulou68]

Firstly excuse my ignorance to this law but within a large group of friends here in France, no one was aware that when ones spouse dies you are liable to pay a tax on their assets (including shared assets).  Can someone please clarify this law as I have a friend and neighbour who has just lost his wife to cancer and whislt dealing with his grief is now faced with the complications of right to succession.  Having bought 'en tontine'  it was thought assets were transferred to the surviving spouse.  He has been advised by a notaire that his assets will now be valued and faces a tax payment of 10% of the value.  He is aware that he has 76,000euro tax free.

[val douest]

Yes, I'm afraid that the notaire is correct.  When a property is held

'en tontine', and the first partner dies, then taxes are payable as if

half the property is being inherited by any other beneficiary (although

there is an allowance of €76,000 against the value of the estate, as

you say). If they were married in the UK (or any other country with a

'separation of estates' regime)  then their assets will be treated as

belonging to each separately and they cannot be transferred tax-free to

the surviving spouse as they would be in the UK.   Assets held in joint

bank accounts, or in joint names (except for the property bought en

tontine, to which different rules apply) are deemed to be owned by the

parties in the proportion to which they contributed to the account or

the cost of the asset. 

This is one of the reasons why so many married couples moving to France

elect to enter into a community property marriage contract (the regime

under which French people are usually married) either before they buy a

property here (the simplest way) or at any time afterwards.  This means

in general terms (and providing the contract contains the appropriate

clauses) that on the death of one spouse the joint assets of the

marriage pass to the other with no inheritance tax payable; there is

however a 1% charge for registration of the estate.   Changing to a

communal marriage regime is not the answer for everyone, but where a

couple are married, with adult children of that marriage who are not

opposed to the change of regime, and with no other children from

previous relationships, then it is one way of deferring the passing of

the estate to the children until the death of the second spouse.  The

'en tontine' route is often used to protect a spouse or partner from

being made homeless by estranged relatives (particularly children

outside the marriage).

The above summary is, to the best of my knowledge, correct, but I know

the laws regarding inheritance are undergoing some changes at the

moment.  In any case it is always important to check how rules and

regulations apply to particular circumstances before making any

decisions of this kind.

I am not sure what the current rules are regarding payment of

inheritance tax but according to the 2002 edition of  Charles

Parkinson's 'Taxation in France' ...

"A declaration giving a description and valuation of the assets

received must be sent to the Administration within 6 months of the

death.  The tax is due before the declaration is registered, but it can

be spread over a maximum of five years, subject to a charge for

interest".

I am very sorry for your friend; it must be so difficult for him to

wrestle with

all the inheritance business when he is grieving for his wife. However,

it sounds as if he has caring and supportive friends to help him

through this difficult time.

Best wishes

Val