Succession planning concerns in France – FAQs

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16.02.24
Succession planning in France

Succession planning in France can cause some concerns among UK nationals living there. In this article, we address some of the frequently asked questions we receive on this complex subject.

We sleep better when we feel confident our affairs are in order, and as we get older we think more about the legacy we will leave to future generations, particularly who will receive our assets on our death and how. Review your succession planning arrangements on a regular basis to ensure your wishes will be fulfilled, taking account of changes in your family and any regulation reforms.

For British expatriates in France, estate planning is made more complicated by the French ‘forced heirship’ succession law and succession taxes which can rise to 60%.   It’s a complex regime and a topic we receive so many queries about, so here we address some frequently asked questions about succession in France.

As a UK national living in France, should I have a UK Will or a French one?

It’s often beneficial to have two wills – one for your assets in France and a UK one for British-based assets. They should align and cross-reference each other to avoid conflict.

A UK will can be effective in France, but after going through the UK probate process it needs to be translated and notarised before obtaining probate here. Separate wills can prevent delays and expense for your heirs.

Your will should follow French succession law, or officially opt for UK succession law to apply to your estate, otherwise it will be invalid. Please note that a new law was voted in 2021, according to which, if French assets pass according to the provisions of another country’s succession law with no forced heirship rules (e.g. the law of England & Wales), the protected heirs (ie biological or adopted children) of a French resident can make a claim for the share they would be entitled to under the French rules. The compensation mechanism applies only to French assets.

This recent law will probably be challenged in front of French courts, however, in the meantime, if an individual dies as a French resident, they should comply with French forced heirship rules even if they have signed a UK will if they want the will to be enforced.

How much French inheritance tax will my children pay?

Each child benefits from a €100,000 tax-free allowance. The tax rates start at 5% (for inheritances up to €8,072) but rise progressively to 45% (for the excess above €1,805,677).

This does not apply to stepchildren, who generally pay tax at 60% with virtually no allowance.  This could potentially apply to your own children. If you, for example, leave assets to your wife who is not their natural mother, who then leaves the assets to your children on her death, they are treated as her stepchildren and taxed accordingly.

I don’t have children and plan to divide my estate between my sister, nephew and godchild.  What tax will they pay?

The tax rates can be rather eyewatering: generally speaking, it’s 35% or 45% for your sister, depending on the amount, with a €15,932 allowance; 55% for your nephew (€7,969 allowance) and 60% for your godchild (€1,594 allowance).

Can I bypass succession tax by giving assets away while I’m still alive?

You can gift set amounts tax-free during your lifetime but, above these limits, gifts are taxable and the exemptions only renew every 15 years.

Be careful when giving assets away.  Some people don’t leave themselves with sufficient resources to live comfortably long term.  Gifting your home to children or making them part-owners can cause problems in the future if there’s a falling out, someone gets divorced, or you need to sell it.

I own our house entirely in my name. I want to gift half to my wife, but will she pay tax on the transfer?

While inheritances between spouses are tax-free, gifts are not. Anything above €80,724 is taxable.

You also need to follow French succession law, since children are ‘reserved heirs’.

Succession planning in France – why can’t I leave all my assets to my spouse?

Under French succession law (the default position unless you make other arrangements – see below), inheritances must pass down the bloodline.

Children are protected heirs and must inherit between 50% and 75% of your estate (depending on the number of children). You can leave the ‘freely disposable’ part to your spouse/PACS (civil) partner. If you haven’t made a will, it’s even more complicated.

My partner and I have been together 10 years but have no wish to get married. What happens when one of us dies?

I’m afraid you may feel the force of the French succession regime. If you are not in a PACs (civil partnership) either, you’ll pay the highest rate of inheritance tax – 60%.

Remember that if you have children, they have inheritance rights over your partner.  If you successfully bypass this rule, leave assets to your partner, who then passes them back to your children from a previous relationship, your children will also pay 60% tax.

More complicated families face more complicated rules, so advance planning is key.

Can I bypass French succession law?

You can use the EU succession regulation ‘Brussels IV’ to opt for the succession law of your country of nationality to apply on your death instead of French law.   You must opt for this in your will, or French law applies by default.

As mentioned above,  currently there are limitations to this. Under French law, if you bypass your children they can claim compensation for the assets located in France (which they’d have inherited under French law).  This contradicts EU legislation, so may change in the future.

In any case, always establish first how opting for UK law may affect your family and wishes.

Remember too that if you leave assets to people besides a spouse or descendants, they’ll face huge tax bills.  They may even have to sell the family home to pay the bill.

There may be other ways to leave assets to your chosen beneficiaries.  For example, inserting an ‘en tontine’ clause into the conveyance when buying a property ensures it will pass to the surviving tontine holder.

The different types of marriage contracts available in France can also affect how assets are owned and are worth exploring.  But they may have tax consequences, especially for more complex families, so take advice.

Do the same succession rules apply to capital investments?

Yes, generally speaking, both succession tax and law apply.  However, it is easier to avoid these than with real estate.

A widely used solution is to hold investment assets within an assurance-vie.   These policies can considerably mitigate succession tax and are exempt from succession law, passing automatically to the nominated beneficiaries when the life assured dies.  Normally a savings vehicle, they are a great source of beneficially taxed income – but they are also fantastic succession planning structures. Arguably, the estate planning advantage of an assurance vie outweighs all the other benefits.

Succession planning in France – a little help goes a long way!

The French succession regime is detailed and complex, so we can only touch on some issues here in general terms.  Do sufficient research but also take professional, specialist advice to ensure your wishes for your heirs are fulfilled.   Every family is different. Your succession planning must be tailored to meet your personal objectives and unique family situation. Blevins Franks has almost 50 years of experience advising expatriates in Europe. Our advisers live locally and have a deep knowledge and understanding of succession law in France. They can guide you through the steps you can take to protect your heirs and family.

Contact us now.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.