Q. We are currently considering buying a holiday home in France. My husband, John, has 2 children from a previous marriage and he hasn’t seen or heard from them for more than twenty years, so we don’t want them to have any more than we are leaving them in our UK wills, which is less than they would receive under French succession laws. John and I don’t have any children of our own.
As we understand it, if we bought a property in France, either holiday or permanent residence , and have a tontine placed on these options and I die first, then the property is not subject to French succession laws and John’s children are disinherited. Is this correct?
If John dies first, then what would happen? Would the property then be subject to the succession laws and John’s children would then become entitled to their shares ? Also there is no mention of investments or any money in the estate, is this also taken into account when talking about French succession laws? We really would appreciate some further information, as we are finding it very difficult.
Sarah Bogard advises:
You are correct to be considering the ownership structure before you buy a property in France. Your research thus far has clearly flagged up the issues you need to take into consideration.
To answer your last question first, the scope of application of French inheritance law depends to an extent upon your domicile and residence status at the time of death. It sounds as though you are only intending to use the property as a holiday home, rather than making a permanent move to France. As such only the distribution of the property (an “immovable” asset) would be governed by French law. However if you are resident in France at the time of death then French law could also apply to other assets.
That said, since August 2015 it has been possible to avoid the application of French inheritance law but making an express declaration in your Will referring to the EU Succession Regulation of 2012. France is bound by this Regulation. You are able to declare that you want the succession laws of your country of nationality to apply to your assets. Presuming that you both have British nationality, it will therefore be possible for you to to declare to English succession law (if your closest connection in Britain is with England) to apply to your estate in France. A Notaire in France will recognise a validly made declaration and apply English succession law. As English law gives you testamentary freedom, your husband would be able, in his Will, to leave the French property to you and disinherit his sons.
If you don’t make such a declaration in your Wills, it could be implied from the wording of the Wills, but it would be preferable to make specific reference. Failing this, French succession law would apply, and in the case of your husband this would be in favour of you and his sons.
It has been considered that the EU Succession Regulation and the ability under English law to disinherit children, is not contrary to public policy in France. However, if either of the children, on your husband’s death, were to be suffering financial hardship, there is a possibility that value in his estate may be redirected to that child.
Notwithstanding this option under the EU Succession Regulation, you should still consider all the possible ownership structures before you buy, to decide which one is most appropriate for you. It is not always the case that one option will completely fulfil a couple’s objectives. Tontine is indeed one option. It is a contractual agreement between the buyers inserted into the purchase deed, so you must decide if you want to buy this way before you complete your purchase. On the death of an owner the surviving co-owner becomes the sole owner, regardless of what the owner’s Will states about the property share . If your husband dies first, under French law you will be considered as the sole owner retrospectively from the date of purchase.
However, be aware of circumstances in which his children could question the validity of the tontine agreement – for example if you are of differing ages or health such that the chance of survival of either of you is weighted more towards one, or you don’t equally contribute towards the purchase price. You are right in pointing out that if you die before your husband then on his subsequent death his children would, under French law, be entitled to inherit at least part of the property (their reserve légale) under French law, subject to any valid application of the EU Succession Regulation to apply English law instead.
There are some other options to consider. You could weigh up the pros and cons of the property being bought in your sole name, as stepchildren don’t have legal inheritance rights in respect of a step-parent’s estate.
These are only a few pointers for you. It is important that you consider all your options taking into account your objectives, and also associated issues such as inheritance tax.
For further information contact Sarah Bogard, Senior Solicitor & Chartered Tax Adviser on 01227 763939.