Important changes to French inheritance laws

In England, we are used to being able to decide who should inherit our assets when we die. However, once you are considered a French resident, the ‘Code Civil’ stipulates that a set proportion should go to your ‘protected heirs’ (i.e. your children). This also affects owners of ‘second homes’ in France.

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For example, if you have two children, they are entitled to 2/3 of the value of your world-wide estate. It is only the remaining proportion that you have some control over. If you are not married, and there is no will, the entire estate will pass to the children.

Whatever your will might say (e.g. leaving 100% to your spouse or a friend), these ‘protected heirs’ can insist on receiving their percentage. It is possible to insert a clause in a will whereby your spouse has lifetime ‘use’ of the matrimonial home. They can also continue to receive income from any investments for life, but they cannot sell any assets, (or spend any money), destined to go to the children (e.g. money in a bank account).

Unmarried couples face a tax bill of 60% of any inheritance, after a derisory allowance of the first 1,594 euros. The same applies to anyone you are not directly related to, including any stepchildren.

‘PACS’d couples have the same rights as husbands and wives and are not liable to pay inheritance tax.

Changes in legislation have improved the rights of the spouse to a certain extent, but the situation is still far from ideal. This only ensures that a spouse receives 25% of the estate and the lifetime right to continue living in the matrimonial home.

The good news is that France signed up to a recent EU law under which citizens of other countries will be allowed to opt for the inheritance laws of their country of birth. This came into effect on the 17th August 2015.

Providing you have written a will stipulating that your estate should be disposed of under English law, you are at liberty to leave your assets to anyone you want (and in any proportion). This will take precedence over the Code Civil and completely eliminates the question of ‘protected heirs’.

It is worth mentioning that Scottish inheritance law has some similarities with the French ‘Code Civil’. Anyone born in Scotland would still have some restrictions on whom they could leave their estate to (although the limits are far more generous for spouses and it would almost certainly be preferable to take advantage of the new laws).

For reasons best known to themselves, the UK and Irish governments have not signed up to this EU legislation. Nevertheless, this in no way prevents UK citizens living in France taking advantage of the new rules.

If you have any assets (e.g. a bank account) in the UK, it is usually advisable for you to have both English and French wills. Whilst not compulsory, it does make the winding up of the estate far simpler (and cheaper!).

Wills do not need to be complicated and it is quite likely that a standard version for both English and French wills would suit your purposes.

There are other factors to bear in mind before deciding whether it is in your interests to take advantage of the new legislation. If you have a ‘classic’ French will and are on good terms with your children, they can simply sign away their rights to the inheritance. Mentioning the new law may confuse the notaire in charge of winding up the estate.

Also, you could lose the valuable tax-free limits that your children would otherwise be able to take advantage of.

Personally, I believe the people most likely to benefit from the change in legislation are those who have children from previous relationships, those who want to leave money to their beneficiaries in unequal shares and those who want to leave money to people other than their direct descendants.

You should bear in mind that this new ability to leave your money to anyone you wish in no way affects the inheritance tax rates. As previously mentioned, there is no inheritance tax between spouses. However, after an allowance of €100,000, children will pay a sliding scale of tax (usually with the majority of the excess being taxed at 20%). If you leave your money to third parties, or charities, they can expect to pay 60%.

Assurances vie policies are frequently used to avoid inheritance tax. Providing these are set up before age 70, each named beneficiary can inherit up to 152,500 euros, totally tax-free, and it is not considered part of the estate. Any sum in excess of this is taxed at a flat rate of 20%. This is particularly beneficial if you are leaving money to an unmarried partner, a charity, grandchildren, etc where they would avoid paying the 60% tax!

This is one of the reasons that these policies account for the majority of the investments in France (as well as being the nearest thing the French have to a UK ‘tax-free ISA’).

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TSG Insurance Services SARL, (The Spectrum IFA Group).

I am registered and licensed with the ‘Organisme
pour le register des intermediaries en assurance’
(ORIAS - no 07 032 493)’ and an accredited
‘Conseiller en Investissements Financiers’ (référencé par
ANACOFI-CIF no EOO2440).

TSG Insurance Services SARL
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Société de Courtages d’assurances. R.C.S. Paris B447 609 108 (2003B04384)

This report is intended simply as a summary of some aspects of French succession law and inheritance tax. It is based on my understanding of current legislation, which may be subject to change. No liability can be accepted for any change of interpretation or practice relating to any tax or legislative measure that may affect the accuracy of the content.

Are these new laws only to EU citizens? How does it affect U.S. citizens?

After speaking to Graham I now feel more confident about how to deal with my French will. Finding a new notaire who acknowledges the recent change in inheritance law is the first step. It is possible that Graham has already saved us a considerable amount of money. We found him very helpful, informative and approachable. We will certainly consult him in future.

Thanks again Graham

Barbara and Paul

Before embarking on consideration of the french situation, everyone needs to read the recently published European Succession Regulation, published août 2015. This new EU regulation, substantially alters the applications of various member states and third states, (which the UK is to become) There is also provision for US citizens, with respect of the differing laws of the individual states, within the union(US). My radio ten year running programme Culture Gap, now hosted by ex-patradio.fr is about to broadcast follow-on talks by Maitre Emmanuel Araguas, french avocat and solicitor of England and Wales, about exceptions to the regulation. His previous talks were broadcast earlier this year, where he discussed the complete regulation, and are on the programme's FB page.

It is true that any person who benefits from a succession, in France, who is not a spouse or an offspring, is due to pay 60% "gift" tax. This can be avoided, by selling the property, which only involves the notaire's fees. This would apply to persons who are near death or of extreme old age. The sale would provide for a "life tenancy" of the seller, in much the same way as a spouse would under french succession rules, and on their death, the offspring then get complete ownership. Of course, this, like the “Viager” system operated here in France, is open to abuse, i.e. those waiting for the demise of the incumbent, might resort to nefarious methods to bring forward that demise!
Unfortunately, not many solicitors in Eire or the UK seem to have taken the time to read the new Succession Regulation. There are versions in all of the EU languages, so there is no excuse for not knowing how it is supposed to apply. An understanding of the term “Professio juris” is also needed, when interpreting the regulation. Before consulting any legal-eagles, it is advisable to acquaint yourselves with that term: google it.

Holly, there is a section in the talks, which deals with the US situation, which involves states, which have differing succession rules. (There are variations in some of the States in the Union). The new EU regulation is quite complicated and took some time to formulate. Bizarrely, just before publication, the word "will" was removed!

hi, i'm kind of a newbie and don't understand where i can find this info re usa wills. thx for any help.

Lisa,

The only real issue for non France residents, is that of property in France. If you cannot leave it to a spouse or children, then it is subject to "gift" tax: 60%. In the case of the US, some states have different rules for overseas properties and inheritance laws, so besides having to pay the French Govt, you might have to also pay your US State. Property outside France, doesn't come into it, nor do bank accounts outside France, unless you are permanent french resident, tax paying etc, in France, and have no other ties to other countries.

Culture Gap Programme’s resident legal expert, Maitre Emmanuel Araguas has just sent me 50 minutes of "exceptions" to the European Succession Regulation, to be broadcast on my radio programme, and he does mention the US. In previous programmes, I broadcast his discussion of the Regulation, which is quite complicated.

You can get copies of the Regulation from the EU admin. Emmanuel says that the Regulation has some areas, which are quite “grey” and are posing problems, as to interpretation. It seems that the french view is that when a will mentions a beneficiary, before the owner dies, it amounts to a gift. This raises the possibility of beneficiaries, who benefit by default, due to no will being made. I don’t know if there is any way of them avoiding the 60%, because they weren’t named. In a “common law” jurisdiction, this would be sorted by a court judgment, but France isn’t a Common law country, and I’m sure they have that one sewn up!

By chance, when interviewing some expats, who were attending an exhibition opening, here in Eire, last week, I raised the subject of the Regulation, and one of them mentioned that he was in contact with the Spanish authorities, in respect of moneys he paid to them, due to a death. He explained that the Spanish have been told by the EU to refund the money.

I know of a recent situation, where two cousins share-owned a house. One of them passed away, and the other has to find the 60% of the other's half, or have to sell the property to raise that %, as he has no children. The same deceased cousin has left another property, he owned outright. This property will go to next of kin, who have to sell and pay the 60%. There are step children involved, but they weren’t adopted, and he was divorced.

Hi there. my father passed away recently. He was from the UK but lived in France with his second wife for a very long time. I have not seen his will but she says that he left everything to her and her family. I find this difficult to believe and would like to see a copy of his will. I have tried the adsn but the report came back blank and I have emailed his noraty many times (the town hall mairie gave me the name of the notary who is on his death certificate) but they are not replying. Is there anything else I can do? I would like to see his will for two reasons- one to check that what she is saying is accurate and two to see whether it is governed by english or french law, as I believe that if it is governed by french law then their inheritance succession law automatically passes a portion of the estate to his children. Does anyone have experience in this area? Lastly, I have just found out that she is already selling the property they lived in, which was in his name. Does this suggest that his estate has been settled since she is free to sell the home? Any help or advice would be very much appreciated! Thank you!

Have you checked this website out as may be able to help. It is quite common in France that people don’t reply to emails…(strange, but true) so I would suggest you phone the notaire. If you don’t speak french ask someone who does to be with you when you phone.

https://www.notaires.fr/en/donation-succession/succession/accessing-wills-registry

Thanks so much. I have been putting off phoning as I don’t want to appear too pushy but I will do it on monday. I have looked at the wills registry, I sent away for a file and it came back blank- its all pretty confusing especially when trying to use google translate to navigate through the process!!

Maybe he made a holographic will, this is quite legal. I have made one and have had it checked over by a notaire. It isn’t registered anywhere, but the people who benefit know where to find it.
I also used the EU regulation and opted for English law. Could be that’s what your father did !
In that case I don’t think that you have any say so as to what happens to his assests !

Thank you @Misty36140 I definitely don’t want to claim anything he didn’t want me to have, I just want to be very sure that that’s the case so I would love to see a copy or the will or at least its contents, because it could have been made under French law. Although I assume that if it was, the notarie would have been in touch with me by now. It’s just quite a difficult thing to accept so I’d love to see it with my own eyes!

You could try writing to the notaire (registered letter) explaining that you are one of X’s children and asking if a will was made and under what regime.
Follow this up with a 'phone call a few days later, that way the notaire, or the secretary, will already know what you are 'phoning about.
'Tis true the notaires don’t respond quickly to e mails but a letter should do the trick.
Lots of info on google on how to address a letter to a notaire (much more formal here in France) that may help you.
Good luck and do let us know how you get on :slight_smile:

Thank you SO much, I wish I’d found this forum sooner. I’ll definitely take these steps and keep you posted!