From what Shiba says, it’s the Donation entre Epoux bit that matters.
To be honest, we just went along with our notary at the time without questioning his advice. Not sure what difference it would have made in our case if , instead of switching from “séparation des biens” to “communauté universelle des biens avec donation entre époux” we had switched to “séparation des biens avec donation entre époux”. But never mind. Might be of relevance to other couples, though.
Yes, if you and Fran had not done the “donation entre époux” and if Fran had not had children, then on her death, half of her assets would have gone to her sis.
At least you and your wife had the good sense to make arrangements. It’s astonishing the number of people who move to France and don’t realise the importance of this stuff.
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We went to see our notaire before we moved to France (but by then owning our French property) to write French wills. The notaire dictated the wills wording for us to hand write out.
We were married in England, have no children, and there’s are no prior marriages. Presumably the regime of separation de biens arises, by default. Everything is left to the surviving spouse, and then to various French charities, mostly animal rescue. Hopefully it’s fairly simple, and also tax efficient, for what it’s worth!
We should have followed your example and left everything to French charities. Instead when doing our French wills, we left everything - ultimately after both of us are dead - to our niece and nephew who are now going to be saddled with a hefty inheritance tax bill plus probably endless paperwork. I’m thinking of changing the wills to cut them out and thus spare them.
I’m just as confused as before. You seem to be contradicting what @Helenochka has written.
I have no children.
What has precedence, the marriage régime or the will? I know you can’t disinherit children in a will, but how about the other relatives, sister etc? Does it depend on the régime? We went to a notaire, who said, that, as we were married in Germany (EU), the same régime would apply as in Germany, which, without a separate contract, would be the régime de la communauté légale. But we’re increasingly getting the impression that she didn’t know what she was talking about!
I think George means that if he had done nothing, the regime of separation of property would have applied. But that because he did a will, everything will now go to the surviving spouse.
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I too am wondering why the notary advised us to change our regime rather than just write a will. Maybe, because we were young, he thought there was still a chance some kids might come along.
If a pension lump sum I’d look at taking it after 1st January as that is a fresh French tax year and commence residence on a later date than taking the lump sum.
Possibly possibly making sure by 31st March of taking it to keep in this UK tax year. Starmer has kicked off a review of pensions as a priority after taking office and there is word the 25% tax free on lump sums may be targeted to be worsened.
Obvs beware if there’s any UK minibudget annoincements in, say, 6 months too.
Guessing an alternative strategy would be to make your provable.journey into F to take up residence, say, 1st December making you liable to fill out your first French tax return in April-May or so next year for the part year you are resident ie December. Taking a guess this makes the French Impôts more willing to sign a France Individual form (that you send to HMRC with France Impôts signature proving France is now your country of tax residence which will take you out of the UK tax net for most things except UK property-derived income/capital gains and pensions paid as a UK functionary)… thinking could be easier to get France Impôts to sign it if they can see you’ve submitted at least 1 French tax return?
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Others on SF know a lot more about this than me but I am also wondering about any difference in selling UK house by 31st December as compared to after you become resident in F.
They can always refuse the inheritance. I have left my nieces in as who knows whether they might need it then.
Very interesting thread re inheritance rules. If we are still resident in the UK and have UK wills, would everything be handled under UK rules or does France still have there ideas on our French property?
Uk resident with UK wills then probate and inheritance of everything apart from French property is under UK law - even French bank accounts and their contents. But property is handled under french law and you should plan for that.
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Thanks Jane, yes definitely something we need to look into.
We could leave them cash (they would have a hefty tax bill - around 50% tax rate - but at least they could pay it out of the cash). What concerns me is that we’ve left them the apartment and there’s no way that could be sold within 6 months of the death of the last surviving spouse to enable them to pay the inheritance tax. Not sure what would happen then. Apparently the fisc is not flexible in such matters.
A French colleague recently had to get a bank loan to pay the inheritance tax on the family home (big old rambling place that took ages to sell).
A French charity would have the ready funds to settle the bill. And the whole process of selling the flat would be easy for them, whereas I suspect my non-French-speaking niece and nephew who have busy jobs would find it a major hassle.
That’s exactly how I understand the situation - the will provisions are critical. Also no French inheritance tax on transfer of assets to surviving spouse.
My understanding is that by leaving everything to specific French charities (after both our deaths!) eg SPA, means that there is no inheritance tax to pay whatsoever by them. The aim was/is to maximise what they receive, assuming we haven’t spent it all in our lifetimes!
OK, George, I will make an appointment to change our will. Am a big fan of the SPA so they can have the flat. Niece and nephew can have some cash but they’ll probably spend it on crap like a kitchen extension.
Now what about property in the UK? If we’re resident in France when we both die, would UK inheritance tax apply to that? Or does the long arm of the French taxman extend to that too?
Although resident in France, we are, I think, domiciled in the UK. We have kept our personal allowances in the UK and told HMRC that we intend to return one day. My understanding is that under the bilateral tax treaty, property in the UK would be liable to UK inheritance tax only. Not sure about bank deposits.
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To keep everything as straightforward as possible we bought our houses en tontine (though that wasn’t the exact phrase used on the second one when we moved a few years ago). If one of us dies it passes directly to the survivor. We only have a joint bank account with M. ou Mme.
We checked everything with our notaire recently and the only thing our children would have a share in are the “biens” (goods and chattels). They would sign a paper refusing the inheritance.
(I am always reminded of the film Milou en Mai when the “biens” are on the dining room table and the family members do a drunken conga around them.)
Is that tontine arrangement watertight, though? I remember when we moved to France in the 1990s it was a popular arrangement anong the British expat community in Strasbourg. But a former colleague whose parents had moved to France in their 60s and used a tontine clause told me recently than when her Mum died in France, the tontine arrangement hadn’t really worked. I will message her later and try to get the details. Perhaps there were complications in this case because the 3 kids don’t get along and one of them was also on bad terms with her parents.
I think you will be domiciled in France for the purposes of the IHT treaty, given how long you’ve lived here (30 years+?). However UK IHT will apply to your UK property, and it seems to your UK bank deposits…
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Maybe as using the tontine clause can wipe out the (measly) tax free allowances for children if they were offspring of first partner to die? Or the fisc determining it was used as a tax avoidance measure and nullifying it.
And yes finding the money for inheritance tax can be an issue. O.4% interest every month and 5% increase in tax due! We had to lend a friend €40k to help when his partner suddenly committed suicide, so they had no provisions in place.
Very important with life insurance that it is written into a trust otherwise it increases the estate value and could create a tax issue and not resolve one. Thats the UK, I dont know about France.