French presidential candidate Marine Le Pen has promised to cut inheritance tax in France. In a long document outlining 144 actions on her election (“because God made the world in 144 hours”), the National Front leader makes a clear bid for the votes of the middle class. But what are the rules today?
The rules of French inheritance are significantly different to those in the UK. When you buy property in France your ability to give it away or bequeath it is governed by French inheritance law. Your legal heirs have mandated rights to a certain proportion of your French property, known as the réserve legale. As such you can only freely give away or bequeath the remainder, known as quotité disponible. In practice this means the French legal system decides who receives your property when you die, unless you put specific measures in place.
Your legal heirs have mandated rights to a certain proportion of your French property, known as the réserve legale
Let’s review how these laws apply to your spouse and children, before exploring their impact on other relatives.
Spouse and children
Central to the provisions of French inheritance law is the concept that your children are specifically protected from being disenfranchised from your estate. You cannot freely dispose of any part of la réserve, which must be held for your children. Only the quotité disponible can be left in accordance with your wishes.
Your surviving spouse is not considered a protected heir under French law. It should be noted, however, that unless you implement specific measures to disinherit them, they are entitled to a minimum of a quarter of your estate. It is possible to increase the rights of the surviving spouse, but this requires some prior inheritance planning.
Your parents and other relatives are not protected heirs in the same manner as your children either, meaning you can choose to disinherit any or all of them by making a will or a gift. Failure to conduct sufficient inheritance planning will result in them retaining some residual rights:
• Ordinary rights of inheritance: if you do not have children or a surviving spouse, and you do not otherwise disinherit your relatives by will or gift, they have ordinary rights of inheritance. In order of entitlement this leaves your parents, your siblings and their children.
It is advisable to seek advice from your legal/tax advisor and notaire.
• Right to reclaim gifts: in the absence of inheritance planning measures being taken, your parents will have the right to reclaim gifts made to you during their lifetime – despite not being protected heirs. Gifts could include anything from jewellery to property. The rule applies up to the value of their legal entitlement in the inheritance.
• Family heirlooms: in the absence of inheritance planning measures being taken, your siblings – or their descendants – have the right to claim half of your heirlooms (biens de famille); your surviving spouse will receive the remainder. ‘Family heirlooms’ are defined as those having been transmitted to the deceased from the parents, either by way of gift or inheritance. This could include anything from jewellery to property, if you inherited the property from your parents. If you only leave family heirlooms then your surviving spouse is entitled to all of them.
Inheritance planning in France
There are measures you can take to secure greater control over your estate, and reduce potential inheritance tax liability for inheritors. You may need to adopt more than one solution, the combination of which will depend on your circumstances, aspirations and needs. Therefore, it is advisable to seek advice from your legal/tax advisor and notaire.
Since August 2015 European regulations allow for EEA citizens to choose whether the law applicable to their succession – but not inheritance taxes – should be that of their place of habitual residence or that of their nationality. If you make no choice, the succession of your estate will be governed by French law if you are living in your property there. This provision will no longer be applicable to British citizens once the Brexit process has been completed.