Property Inheritance

[quazzy]

My husband and I purchased a house in France 1 1/2 years ago on a 11 year mortgage.  My husband has children from a previous marriage, but we didn't know enough about various clauses concerning inheritance at the time of signing.  If we understand correctly, when the unfortunate event occurs of my husband passing away (with him being a few years older than myself) as it stands at the moment his children will be entitled to a large proportion of our property!  We need some advice on how to tackle this situation, so as to ensure that the property is solely inherited by the surviving spouse.

[Will]

French succession law is intended to protect the blood line and it is virtually impossible to disinherit your natural children. It can be possible under some circumstances to postpone inheritance of a property by one partner's children until after the death of the other spouse, but this generally needs to be done as part of the house purchase process so that the right words can be included in the acte de vente. A change of marriage regime may go part way to achieving a similar outcome, and can be undertaken after purchase, but it may not achieve all of what you want.

You really need to take the advice of a professional, qualified in French inheritance matters.

[anneb]

Have a look at: http://www.prettys.co.uk/personal_law/french_property/services.shtml

and download their 'Introductory Guide to French Succession Law and French Inheritance Tax'.

You should defintiely seek the advice of a solicitor conversant in French succession law or a notaire. I don't think you can overrule the rights of children from a previous relationship, even by changing your marriage contract to 'communaute´ universelle', but there might be a way to protect yourself, like having a life interest of some sort.

If you bought your house 'en tontine' you have protection I believe, but only of the house not the rest of your shared asets (if you live in France that is) as far as I can understand. My parents had tried to work things out so that my mother, who they thought would outlive my father, would not have to share their assets with myself and my brother when my father died, and so some years before they got too old, they put most of their money in her name solely. As fate would have it, she died first, and so 'their' money had to be divided between my father, myself and my brother.

Anne

[Gwynfryn]

To avoid inheritance problems, my wife and I (second marriages in both cases) set up a company- an SCI, Societe Civile Immobiliere which owns the house with the shareholders being the children, in the proportions we required. So when we die it won't make any difference, and when they die- not for a long time we hope- their shares can be disposed of as part of their estate in the normal way.

Our notaire, who was generally very helpful, would not however, allow a clause to prevent the shareholders from being managers. Thus, I understand there is a risk of their being got for UK tax on benefits in kind. Hopefully theoretical?

My wife and I are the managers(gerants) of the company. Everyone pays rent when they stay(£20 night for the house), but it runs at a colossal loss, covered by a loan from us.

I don't know if the French tax system allows the SCI to carry forward current losses to offset against future profits, should there ever be any.

I don't claim to be authoritative, but an SCI may be a way to avoid bigger problems in future.

Regards

Gwyn

[Nick Trollope]

[quote]To avoid inheritance problems, my wife and I (second marriages in both cases) set up a company- an SCI, Societe Civile Immobiliere which owns the house with the shareholders being the children, in the...[/quote]

An SCI seems to be the oft recommended approach. However, surely in the case of the OP, this is not possible without reselling the house to an SCI and incurring another set of fees & taxes. I doubt if you could sell a house for less than market value, simply to avoid tax. Or have I the wrong end ofthe proverbial.....??

[Teamedup]

Can full time french residents have an SCI for their main residence? Just wondering.

[anneb]

From what I understand, with an SCI, French Inheritance law is only avoided if the shareholder dies domiciled in England.

[Gwynfryn]

[quote]From what I understand, with an SCI, French Inheritance law is only avoided if the shareholder dies domiciled in England.[/quote]

'From what I understand, with an SCI, French Inheritance law is only avoided if the shareholder dies domiciled in England.'

It's the French inheritance law regarding 'immobilier'(real estate) which is avoided by an SCI. Shares can be dealt with by a normal will(UK or French as appropriate) , as far as I know.

(We, and the shareholders, are resident in the UK).

The problems in this area are potentially great, and, with reluctance, I think the advice of  a competent professional would be worth paying for, when you've found one.

Gwyn