As I hope most of you already know, under French law, if a French resident individual has children, they cannot leave assets to who they wish. Strict inheritance rules mean that children have certain rights to their deceased parent’s estate.
For someone with one child the reserved portion is 50%, 67% for two children and 75% for three or more children, split equally between them. The remaining percentage is considered the unreserved portion and may be left to whomsoever the owner pleases.
Whilst the French forced succession rules are not changing, new EU rules on succession have recently been agreed, and once finally adopted (expected in the summer of 2012), will come into force 3 years later, in 2015.
These new regulations will give expatriates the right to opt for the succession law of their country of nationality to apply on their death.
Without an appropriate will, the French succession rules above would continue to be applied to a French resident’s estate.
However, with a correctly drawn up will, it should become possible from 2015 to opt to use the law of the country of your nationality. For British nationals, this should mean that you can opt to use British rules – leaving your assets as you wish via an appropriate will.
It is vitally important to understand that, whilst it will become possible to choose to use UK law for the distribution of your estate, it is only this that has changed, as the new regulations will not apply to tax issues.
For example, whilst it will become perfectly possible to leave all of your assets to your spouse in the first instance, assets left to be divided between children and step-children would still result in the step-children facing a punitive 60% French inheritance tax on anything over a minimal allowance of €1,594.
At first glance it would appear that this will be a significant advance, since inheritance issues are the main concern of most British residents in France. However, in many cases, using the many techniques available under French law to ensure that your wishes are met and taxation is kept to a minimum, is likely to be the preferable option, so no action should be taken without professional advice.
Jennie Poate is a Regional Manager of Siddalls France, Independent Financial Advisers specialising in investment, pension, tax and inheritance planning for the British community in France since 1996. If you have any questions or concerns please do not hesitate to contact me on 06 88 47 53 03 or visit us at: www.siddalls.fr