I watched this yesterday and fount it interesting so I thought I would share it:
Can anyone enlighten me as to what the position is in france with respect to minimising IHT ?
Succession tax works very differently in France. Basically the heirs are taxed individually, each at a rate and with an allowance depending on their relationship to the deceased. So eg a child (direct bloodline) pays less tax and has a higher allowance than a nephew, who pays less tax and has a higher allowance than a non relative. And all the many graduations in between.
It is not the estate that is taxed, as I believe is the case in the UK.
A notaire will advise based on your personal circumstances.
Generally trust are regarded with suspicion in France and are not a way of reducing IHT.
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Traditionally, Assurances Vie were used to mitigate the effects of Inheritance Tax in France, I believe.
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Yes, assurances vie are useful. Also lifetime gifts but there are precise conditions attached.
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The French fisc view Trusts as tax evasion and do not like them. Plus annual reporting requirements are onerous.
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thanks for all your replies. Reading between the lines it would seem so far that unlike in the UK, there is no sure fire way to reduce IHT in France
As said. Assurance vies, lifetime gifts, possibly SCIs, but also avoiding making bequests to non relatives or distant relatives who would be clobbered for tax and probably not thank you for it.
If you have a several children and a modest legacy to be shared between them, there may well be no tax for them to pay in any case.
The French have a different approach that is generally more planned. So they use the tax free allowances for gifts, assurance vie and splitting off usufruit from the full ownership. It’s done during one’s life rather than after death,
So for example one gifts the capital value of a house but retains the usufruit.
You can or course leave your estate to many types of French charities entirely free of French IHT. That’s exactly what we are planning via our French wills.
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As Assurance Vie has been mentioned in this thread I thought I’d lob in a question that has just arisen in a conversation I was having a few minutes ago. Yes, I know it’s probably in documentation that is available online, but I’m being lazy…
Your starter for 10…
Can one elect a cascade of beneficiaries for an AV? By that I mean could there be a line of succession attached to a policy?
Specifically I’d like to make my wife the only beneficiary of an AV if I died before her or, if she dies before me, my 3 stepchildren instead.
Our AVs specifically include wording that awards them to the surviving spouse on the death of the other spouse, and (ie on the second death) thereafter to various charities in France.
Yes. And if she is the prime beneficiary then she will have the choice to accept or decline. We have a number of AV’s and each have one that is intended for more distant causes, but have left partner as first beneficiary just in case they actually need it.
So I have one split between my step-brother’s children, my mother’s adopted sister’s grandchildren and a charity. Not huge amounts so if partner doesn’t need it he will decline for himself.
This is particularly useful to know - first time I’ve even seen this idea. Just saying to my wife that it’s nice to prepare for death by ensuring that the kids get it all without paying anything to the taxman. Be lovely to clear their mortgages/education costs but does seem like such a shame to spend one’s entire life just about making enough money to get the kids out of debt slavery.