Plan­ning ahead

If you are think­ing of mov­ing to France, or al­ready live there, plan­ning your es­tate will give you peace of mind, says Rob Kay

Living France - - LES PRATIQUES -

Whether you are plan­ning to live in France, al­ready do, or are buy­ing or al­ready own French prop­erty, there is one thing you must con­sider: your es­tate plan­ning. What­ever as­sets you have, your peace of mind will only be as­sured once you have or­gan­ised how and to whom you will leave them af­ter your death, and prefer­ably with­out leav­ing them a large tax bill. And you need to con­sider a tax-ef­fi­cient in­come for your own, hope­fully long, re­tire­ment as well.

Cross-bor­der tax and law is com­plex and you need to take pro­fes­sional ad­vice from some­one who un­der­stands both the French and Bri­tish regimes. In France it is made fur­ther chal­leng­ing by its ‘forced heir­ship’ law and suc­ces­sion tax rates of up to 60%. Many peo­ple are not aware of how the French regime will af­fect both them and their ben­e­fi­cia­ries.


As with UK in­her­i­tance tax, French suc­ces­sion tax is a tax on in­her­i­tances and gifts, but there are dif­fer­ences. French suc­ces­sion tax is cal­cu­lated on, and paid by, each in­di­vid­ual who re­ceives the as­sets (un­like the UK, where the es­tate pays the tax, un­less specif­i­cally pro­vided for in the will).

French suc­ces­sion tax al­ways ap­plies to French real es­tate, re­gard­less of whether you or the re­cip­i­ent is res­i­dent there. It is payable on your world­wide as­sets if you are res­i­dent in France at the date of your death.


Tax rates and al­lowances vary ac­cord­ing to their re­la­tion­ship to the de­ceased in terms of bloodline and mar­riage. The more dis­tant the rel­a­tive, the higher the tax rate.

In­her­i­tances (but not gifts) be­tween spouses and PACS (civil) part­ners on death are tax-free. Tax rates for chil­dren (in­clud­ing adopted but not stepchil­dren) and other rel­a­tives in the di­rect line start at 5% and rise in stages to 45%. Un­der the cur­rent rules, your chil­dren will each re­ceive a tax-free al­lowance of €100,000.

Sib­lings get a €15,932 tax-free al­lowance and pay tax at 35%-45%. (If an un­mar­ried sib­ling has been liv­ing with you for the past five years and is ei­ther over 50 or un­able to work be­cause of a dis­abil­ity, they ben­e­fit from the same rules as spouses.) If you choose to leave as­sets to neph­ews and nieces, their al­lowance is €7,967 and their tax rate is 55%.

There are also tax rates and ex­emp­tions for neph­ews and nieces, and grand­chil­dren. Cer­tain rules gov­ern be­quests to grand­chil­dren and the po­ten­tial tax ex­emp­tions and they can be quite com­pli­cated. Al­ways seek pro­fes­sional ad­vice if you plan to leave them some­thing.

More dis­tant rel­a­tives and non-rel­a­tives will lose 60% of their in­her­i­tance to tax, and their tax-free ex­emp­tion is just €1,594. If a cou­ple is not mar­ried and have not en­tered into a PACS ar­range­ment, they have to pay tax at 60% as they are classed as non-rel­a­tives.

Stepchil­dren are also taxed as non-rel­a­tives. So if you and your spouse have chil­dren from pre­vi­ous mar­riages, if you plan to leave as­sets to each other on the first death, then shared be­tween the chil­dren on the se­cond death, the amount nat­u­ral and stepchil­dren re­ceive will be very dif­fer­ent, even if you leave them the same amount. The nat­u­ral chil­dren of whomever is se­cond to die will re­ceive a tax-free al­lowance of €100,000 and pay tax at pro­gres­sive rates from 5% to 45%, while the stepchil­dren will only re­ceive an al­lowance of €1,594 and will pay tax at 60%, re­gard­less of the amount. Un­der France’s forced heir­ship law, a min­i­mum pro­por­tion of your as­sets must pass to your chil­dren. When you die, your spouse may ex­pect to in­herit your es­tate, but un­der French law one child would re­ceive 50% of it, two chil­dren 66%, and three 75%, re­gard­less of what you state in your will. But there is an­other way to ad­dress it.

The new Euro­pean Suc­ces­sion Regulation, com­monly known as ‘Brus­sels IV’, was de­vised to end con­fu­sion over cross-bor­der in­her­i­tances. The de­fault po­si­tion is that the law of the state in which the de­ceased had his ha­bit­ual res­i­dence at death gov­erns how his as­sets are dis­trib­uted within the Brus­sels IV zone. So if you are liv­ing in France, French suc­ces­sion law will ap­ply to your world­wide as­sets.

How­ever, Brus­sels IV al­lows you to opt for the law of your coun­try of na­tion­al­ity to gov­ern your as­sets af­ter your death across the zone

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