How do French inheritance and succession laws work?
Once you own your new French home, it’s a wonderful time of celebration! Always a busy but fun time sorting out furniture and generally making it your own, it is however very important to make a will and give serious thought as to how inheritance laws and tax work in France. This is of course a specialised area and we strongly advise seeking professional advice from an independent lawyer who is well versed in French law and inheritance in order to protect your interests.
Does my residency status change what I pay?
It is somewhat of a challenge to get to grips with the French inheritance tax laws and important to note that taxes are due to non-French residents as well as those whose domicile is in France. Although there are certain provisions one can make to protect the surviving spouse, we cannot over emphasise how vital it is to seek professional advice and act on it for peace of mind.
In short, both succession and inheritance tax are closely linked and the succession laws must apply to your total assets, whether in France or anywhere else in the wold, as long as you are domiciled in France.
What are the rules on inheritance for spouses and other family members?
The first thing to understand is that French inheritance law is more restrictive than UK inheritance law, in that one cannot disinherit one’s children. It is based on residence which means that the inheritance laws are applicable to all French residents whatever their nationality. No doubt dating back to Napoleonic times, a proportion of anyone’s estate in France must go to the children if there are any. Children are your “reserved heirs”. If there is one child, he/she will receive half of the estate, if two children this is two thirds, if three children, three quarters of the estate.
French inheritance laws originate in the French Civil Code and are residence based.
It is important to note that a spouse is not a reserved heir but is entitled to a quarter of the estate.
If you own the property jointly with your spouse, the amount you have to leave in your estate will be half of the worth of the property. If you have children together, then the spouse can either have one quarter of the half owned by the deceased spouse or a lifetime interest in the property.
Can I have UK law apply to my French assets?
Since August 2015 when EU reforms were introduced, French inheritance laws have applied to one’s whole estate, including assets outside France. However, it has since then been possible to elect to have your will subject to British law, thus giving you the freedom to dispose of your estate as you wish. If you own property both in the UK and France, you will need to make a British will for your UK asset and elect to have British law applied to your French asset.
If, however, you have moved to France on a permanent basis and own no property in the UK, you can elect to have British law applied in your French will (which should be written in both English and French). Note that this will still be possible post-Brexit, even in the event of a no deal situation – all it requires is for the host country, in this case France, to be in the EU. Your desire to apply British law must be clearly stated in your will however. These rules are commonly known as ‘Brussels IV’.
Does tax have to be paid in France?
When it comes to inheritance tax, the beneficiary must pay this in France – unlike the division of your estate, you can’t use British law here. The tax free allowances are different from those in the UK. Like the UK, your spouse is exempt but any children, including adopted children, have a €100,000 tax free allowance per child and then it is worked out on a sliding scale between 5 and 45% depending on the value of the estate. It is unwise to expressly leave anything in your will to any stepchild since the tax burden on them is much greater than on your own children.
How do you write a will in France?
When it comes to making a will in France, you can write it yourself or employ the services of a notaire for a reasonable cost of around €200. Interestingly, unlike the UK, an executor is not needed and the beneficiaries simply execute the will themselves. If any conflict should arise it would need to go to a French Tribunal.
Maximise the value of the estate through currency planning
In most inheritance cases, you will have an Inheritance Tax sum to pay, but you can maximise the value of any estate left to you by using a currency specialist to ensure your money is protected against fluctuating market rates. Currency specialists can also lock in an exchange rate that works for you using a specialist currency product called a forward contract, allowing you to forward buy currency at a set rate for up to a year. This is often a good idea if you have any large inheritance sums to transfer between countries, or ongoing regular payments needed after that. The savings all start to add up, so it is worth investigating for peace of mind at a difficult time.
We can put you in touch with Smart Currency Exchange, rate #1 in the UK for money transfer and the recipients of over a thousand five-star reviews from our readers.
Finding a lawyer to help with inheritance in France
Since some aspects of French inheritance law are often subject to modification, and the area generally is complex, as stated at the start, your interests will be well served by seeking advice and guidance from a reputable Anglo-French solicitor. Owning property anywhere abroad is a very exciting prospect and France remains at the top of the league when it comes to British people investing overseas. Inheritance matters may not be the most pressing subjects on your list as you celebrate your new French home but nonetheless it is something which can and should be dealt with at the outset, with the help of a professional so that you know you are secure in the knowledge you have done everything you can to protect your family’s interests.
We can put you in touch with trusted Anglo-French lawyers with many years’ of experience in helping our readers buy homes in beautiful France. There’s no obligation – simply fill in our enquiry form with what you’re looking for, we’ll be in touch with names that would suit you and you can speak to them for free to learn how they can help.
It may come as some surprise to know that many people either forget or put on the back-burner organising aspects of their property ownership such as inheritance and tax. Sorting out your French will and understanding your liabilities in the event of your death so that your family are well protected really is of paramount importance however and, as previously mentioned, is something you can do at the start of your property ownership, leaving you free to enjoy the many benefits of owning your own French home!