French property and inheritance Q&A

April 18, 2024

Categories French Property Law Updates

Deborah Vaysse, Avocat, provided expert advice to French Property News readers in their Issue 386, March / April 2024

The original article can be found on page 94 here >>

1. We’re buying a holiday home in France, do we need a will? We’re a married couple living in the UK.

Being domiciled in the UK and having property in France can be a source of complications and conflicts of law as in this case, two estates are created: one in France and the other in the UK, giving rise to a complex situation because of the disparity between the two inheritance systems.

Thankfully, this conflict of laws can be avoided thanks to Regulation (EU) No 650/2012, which allows anyone to choose their national law to govern their succession. It is therefore possible to include a provision in your UK will regarding the application of your national law to your worldwide estate.

So, what’s the point of writing different wills for different countries then?

  1. Avoiding confusion: the drafting of the national law provision in the will must comply with a certain formalism. In addition, a UK Will appoints executors and most often creates trusts… concepts which do not exist or are not recognised in French law and which therefore risk creating future complications.
  2.  The unavoidable rules of French inheritance law: While the English system is characterised by testamentary freedom, France has a system of forced heirship under which the children of a deceased person are entitled to a minimum portion of the estate. A child can therefore challenge its parent’s Will, should it disinherit or provide him less than his legal rights under French law, providing that at the time of the death his parent or he was a resident/national of an EU country and the national law chosen in its parent’s will does not recognise the concept of forced heirship.
  3. Tax purposes: While you can choose UK law to govern your estate and decide who will inherit your assets, the same cannot be said of the tax rules that will apply. Your beneficiaries will have to go to a French notary who will collect the tax due in France, which is calculated differently from the UK and can be as high as 60% in some cases!
  4. Practical point of view: having a French will make things easier for your family: no apostille or translation required and most definitely a quicker and smoother process with the Notaire in France.

A French will may therefore be the best option to ensure that your wishes for your French assets will be respected in France even if you’re not a French citizen or living in France.

2. Our friends who have owned a French property for over 20 years told us we should buy using a ‘tontine’ clause – what is this and would it be beneficial?

The tontine clause is an agreement between at least two people when they acquire a property, under which each will have the right to use it and only the survivor will be deemed to have owned it since the signing of the deed. The necessary conditions for the existence of a tontine clause are twofold: equal participation in the financing of the property and equivalent life expectancy between the parties. It is therefore not possible to buy a property en tontine with your children.

In addition, a tontine clause does not exempt you from paying inheritance tax in France! Indeed, the tontine clause is treated as a gift for tax purposes. The surviving purchaser must therefore pay inheritance tax, depending on the degree of kinship with the deceased and the value of the share acquired. While there is no inheritance tax between spouses, inheritance tax between unmarried couples is 60%, after an allowance limited to €1,594.

If the tontine clause is generally used by married couples as being very tax effective, it should be used with caution. If the ultimate aim is to retain the property in the family and pass it on to the children, this clause is restrictive in that it does not allow you to gift the property to your children during your lifetime and means that you lose the benefit of €100,000 allowance per child that each parent has every 15 years to gift tax free.

Care should also be taken in the case of blended families. For example, a husband has two children from a first marriage and his wife has one. The husband dies first, so the wife is considered the sole owner of the property. The husband’s children lose their right to inherit the property.

3. We both have children from previous marriages as well as from this marriage – how can we ensure they all get the same share from our French estate?

In this case, the best solution is to set up a family Société Civile Immobilière (SCI), which enables different members of the same family, related by blood or marriage, who wish to build up or maintain a joint real estate, to do so. The company is simple to set up and avoids many problems. The Articles of Association can designate one or more managers, who will be primarily responsible for making decisions regarding the property. The Articles of Association may also stipulate that it will be difficult or impossible to sell or transfer shares in the company without the agreement of the other partners.

Finally, it is a remarkable mechanism for giving and keeping property in the family for future generations.

You should always be advised by the right professional.  At Furley Page, our commitment is to offer a personalized, quality and comprehensive service to each and every one. Our French department specializes in French property conveyancing, French Will, estate planning, property transfers after divorce, Gifts, French tax, and French general law.