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'Don't wait to make that will': Know your inheritance rules and taxes in France

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'Don't wait to make that will': Know your inheritance rules and taxes in France
Photo: AFP
15:42 CEST+02:00
It's sounds morbid but anticipating your own mortality is one thing you need to do as soon as you come to France, experts say. Here's a look at what you need to know about inheritance laws and tax if you live in France.

You've found your dream home. The contracts are signed. The bags have been packed and the delivery truck has just set off.

The thought of making a will is hardly high on your to-do list but those who know a thing or two about inheritance say it should at least be on that list.

Obviously give yourself some time to unpack and enjoy a glass of rosé in the garden but then it's worth thinking about your inheritance and where it will end up, especially if you are going to become resident in France.

"A lot of people just concentrate on buying their dream property but don't anticipate anything after that, but it could end in disaster," Christophe Dutertre, a qualified notaire from the company France Tax Law, told The Local.

"Really you should make a will within six months of officially being a French resident in France," Dutertre says. "But many people aged 35 to 40 who move over don't think about it.

In other words people need to make sure they have a will in place just in case the worst happens.

But should it be a will in France or their home country, Britain for example?

"It depends if they are moving permanently or not," says Dutertre. "If they are not, I would suggest they have a will in the UK to deal with their estate there and one in France for their French estate.

"But if they move permanently to France then one will in France will be sufficient. The will is the most common way to protect your spouse and children and to make sure your estate goes to the people you want it to," he said.

Although it's worth noting that new EU regulations came in to force in August 2015 that allowed citizens to choose the that law from their country of nationality is applicable to their succession.

So you could live in France permanently but your inheritance is covered by British law.

Basics you need to know

There are a few important points to note about inheritance in France.

Succession laws will kick in on the death of a partner but only that part of the estate belonging to the deceased will be subject to those French inheritance laws. In other words if a couple is married then it's normally 50 percent of the joint wealth.

Another point is that French law protects children from being "disinherited" or cut out of of the estate. A surviving spouse on the other hand is less protected. They do not automatically inherit the estate but won't be completely cut of an estate unless the will makes it clear that is the intention.

In other words you can't disinherit your children if your estate is governed by French law. If you don't make a will then your estate will be be split between your surviving spouse and children depending on the number of siblings. Although the spouse does retain the right to stay in the family home.

The amount given to the children depends on the number of offspring, but is at least 50 percent and is called the “Réserve Héréditaire”.

The remaining portion of your estate is freely disposable by will (“Testament”) and is called the “quotité disponible”.

But if you have a will governed by British law then you can leave everything to your spouse.

Or if it's covered by French law and wish your surviving spouse to receive all of your estate, then one option is to a special type of French marriage contract.

How to make the will in France

Making a will in France shouldn't be too difficult. Some may need to seek financial advice and help especially if their French is not up to scratch but for those who are competent in French should be able to deal with the task on their own.

Dutertre points out that in some areas of La France Profonde notaires will have few international clients and are therefore unlikely to speak English.

If you are making a will in French on your own then all you really need to do is produce a handwritten will, sign it and date it. But you don't need any witnesses. 

You can then make an appointment with a notaire so the will is registered and then there is a record of it. And it shouldn't be expensive.

"If you die in 20 or 30 years time any notaire will be able to search and find the record of the will," says Dutertre.

Inheritance tax

If you have an estate in France then obviously you'll need to think about inheritance tax and you can get a rough idea of what will be deducted. In France it all depends on who you leave your estate to and how much it's worth.

It is vitally important to understand that whilst the EU succession rules will make it possible to choose UK law for the distribution of your estate, it will not apply to tax issues.

Dutertre has this to say:

"The surviving spouse benefits from an exemption of inheritance tax since 23rd August 2007. As do unmarried couples who are in a civil partnership (PACS)

The children of the deceased benefit from an Inheritance Tax free threshold of €100,000. The rates after deduction of the threshold are as follows:

5 percent up to €8,062

10 percent from €8,072 to €12,109

15 percent from €12,109 to €15,932  

20 percent from €15,932 to €55,2324

30 percent from €552,324 to €902,838

40 percent from €902,838 to €1,805,677

45 percent from €1,805,677

Brothers and sisters of the deceased benefit from an inheritance tax free threshold of €15,932 from 1st January 2016. The rate after deduction of the threshold are as follows: 

35 percent up to €24,430
45 percent from €24,430

Nieces and nephews of the deceased benefit from an inheritance tax free threshold of €7,967 from 1st January 2016. The rate after deduction of the threshold is 55 percent.

Non blood relative of the deceased benefit from an inheritance tax free threshold of €1,594 from 1st January 2016. The rate after deduction of the threshold is 60 percent.

One way to reduce the burden of inheritance tax is via gifts to your spouse or children. Although French law will put limits on the amount you can hand over via gifts. The sax tax allowances apply for gifts to children as for the main inheritance so up to €100,000 tax free.

The information above is that people should start to think about as soon as they purchase the house in France, Dutertre says.

"When people think about their life in France and moving here, they think about how everything will be great. They will think about health insurance and getting a carte vitale etc or sorting out their income tax but not inheritance."

Dutertre has seen families end up in "nightmares" after disputes over inheritance when no will was made.

Imagine a surviving spouse finds out that the half a million euro property she is living in is actually in the hands of the children, Dutertre says. "Then the children want to sell it but the spouse wants to remain. It could be an absolute nightmare," he says.

He has also seen siblings fall out over inheritance.

"Everything is fine when the person is alive but then after they die the war starts," he said.

So in other words don't believe you are immortal and think about making that will either in the France or the country you come from as soon as the move to France becomes a reality. 

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