Estate Planning In France
Rupert Holderness explains why it's wise to provide for a comfortable future in France, but also plan to provide for your loved ones and friends....
Are you planning on making France your permanent home? If so, it's essential to review your wealth management to ensure that it's specifically designed around your new life in France. Besides considering how to achieve advantages for your lifetime, it's also essential to get your estate planning in order. Don't risk leaving it too late...
Estate-planning in France is particularly complex and challenging. Its 'forced heirship' regime doesn't allow you to freely distribute your assets upon death, and succession taxes can be as high as 60%. Arrangements that worked in the UK are unlikely to achieve the same results in France and could have unexpected consequences.
French Succession Law protects your children above anyone else, which can be very restrictive and prevent you leaving all your wealth to your spouse, or bequeathing assets to other relatives, such as step-children and friends.
The 2015 EU succession regulation known as 'Brussels IV' gives UK nationals the ability to opt, through their Will, for UK instead of French law to apply to their assets upon death. This potentially means you can leave assets to whomever you want.
Although this seems good news, there's more to it than first meets the eye and it isn't necessarily the best choice for UK nationals. For instance, it's still obligatory for a French notaire to handle your estate, and if you opt for the UK law option, they won't be experienced with it. In fact, the UK has actually opted out of Brussels IV, and so there's uncertainty over how the rules will be interpreted.
Adopting UK law could also negatively affect your existing succession-planning arrangements, and may mean that your estate becomes liable to UK Inheritance Law in addition to French Succession Tax.
You need to assemble the facts and consider your options carefully. There may well be choices under French law which achieve your aims, and without complicating matters.
Whichever law you opt for, French Succession Tax continues to present a significant hurdle. Spouses or Pacte Civil de Solidarité (PACs)
partners are exempt, and children receive a €100,000 allowance each, with tax rates up to 45%. For everyone else the tax rates are higher and the allowances much lower. For example, if you pass assets to step-children, they pay tax at 60% and only get a €1,594 allowance.
There are French structures you can use which provide significant Succession Tax-planning benefits. Look to gain tax advantages for yourself at the same time, and make sure the structures you use achieve your aims - some appear similar but small differences can have big implications.
Estate-planning in France is a very specialist area and it's essential to take professional advice from a wealth manager who's experienced in advising British expatriates in France.