Estate planning in France

We’re a married couple living in the UK and are buying a holiday home in France. Do we need a will?

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.

This conflict 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?

• 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 that do not exist or are not recognised in French law and that therefore risk creating future complications.
• 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 them less than their legal rights under French law, providing that at the time of the death the parent or they were a resident/ national of an EU country and the national law chosen in the parent’s will does not recognise the concept of forced heirship.
• 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. Your beneficiaries must go to a French notaire who will collect the tax due in France, which is calculated differently from the UK and can be as high as 60%!
• Practical point of view: If you have a French will, it will make things easier for your family: no apostille or translation will be required and it’ll most definitely be a quicker and smoother process with the notaire.

Friends have told us we should buy using a ‘tontine’ clause?

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 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. So it is not possible to buy a property en tontine with your children.

A tontine clause does not exempt you from paying inheritance tax in France. Indeed, it is treated as a gift for tax purposes. The surviving purchaser must therefore pay inheritance tax, depending on kinship and the value of the share acquired. While there is no inheritance tax between spouses, between unmarried couples it is 60%, after an allowance of €1,594. If the tontine clause is used by married couples as being 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 their children, this clause is restrictive in that it does not allow you to gift the property to your children during your lifetime and means 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.

We both have children from previous marriages as well as together. How can we ensure they all get the same share of our French estate?

In this case, the best solution is to set up a family Société Civile Immobilière (SCI), which enables members of the same family, related by blood or marriage, who wish to build up or maintain a joint property, to do so. The company is simple to set up and avoids many problems. The articles of association can designate one or more managers, responsible for making decisions regarding the property. They 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. It is an ideal way of keeping property in the family for future generations.

Deborah Vaysse is an Advocat at Furley Page and can be contacted on [email protected] 

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