If you live in France or own a property in France, French law is radically different to that of England and Wales and it is essential that you receive advice on how to deal with your French assets for tax planning purposes and those assets when you die. This is especially important for property.
Residents in the United Kingdom can make a will and leave their estate to the beneficiaries of their choice. If they fail to make a will the rules of intestacy will dictate which beneficiaries inherit the estate.
Residents in France cannot bequeath their estate “la réserve” as the state specifies the children automatically inherit. A spouse is entitled to a quarter share, unless they are specifically disinherited. Residents in France are only free to bequeath the ‘freely disposable’ part of their estate. A spouse is entitled to a quarter of the freely disposable part unless the spouse is disinherited, otherwise the amount freely disposable depends upon the number of children. One child is entitled to half of the estate with half freely disposable; two children are entitled to two thirds with one third freely disposable; and three children are entitled to three quarters with one quarter freely disposable.
Different rules apply to property owned in the United Kingdom as opposed to France. In the United Kingdom, we go through a proves of obtaining a grant of probate and paying inheritance tax at forty percent on the value of the estate after taking into account the nil rate band. In France, the estate is passed to the beneficiaries who then pay inheritance tax individually at a rate in accordance with their relationship to the deceased.
The estate of a deceased United Kingdom resident owning a property in France will pay French inheritance tax on the value of that property. The estate of a deceased French resident owning a property in the United Kingdom will pay some English inheritance tax on the value of that property.
If you want to seek advice on inheritance tax planning, drafting a will or power of attorney, please contact us for further information on how we can help you. We also provide advice on divorce for residents of United Kingdom or France.
We have an association with French law firm Alvarez & Arlabosse, based in Frejus, South of France, which allows us to see clients locally in France, as well as in the UK at any one of our office locations.