French Inheritance

In most English-speaking countries, you can leave your money and assets to whoever or whatever you choose. However, this is not the case in France. French inheritance law specifies largely determines who will inherit from you and what percentage each person will inherit. So, for example, your spouse is entitled to a certain percentage and each of your children are entitled to a certain percentage.

In addition, tax rates on inheritance can be up to 60%. In general, if you leave your assets to a close relative, tax rates are low and allowances are high. For distant relatives or people who are not related, the tax-free allowances are small and the tax rates are high. So, for example, you may be able to leave a moderate-sized estate to your spouse tax-free, but a large gift to a friend who is not related can be taxed high.

Fortunately, there are a number of steps you can take which may allow you to leave your assets to whom you wish, with minimum tax. For example, in France a husband and wife can specify if assets are jointly owned or separately owned. If you should choose to have your assets separately owned, you can still specify at time of purchase that a specific asset (e.g. a house) is jointly owned (in which case there is no inheritance tax as the property is considered to be already owned by the surviving party). However, in almost all cases, these decisions must be taken at a given time (e.g. at the time the asset is purchased) and cannot simply be decided after the bequeathing party has died. Consequently, if you wish to minimize inheritance tax paid by your survivors, you need to develop a timely understanding of inheritance laws and act accordingly.

Fortunately, inheritance tax changes made in 2007 have largely eliminated inheritance tax for small to moderate sized estates which are left to immediate family members. Still, the subject of inheritance tax should be investigated before buying property in France or committing to a move to France, so that you can ensure that the correct format is used for any property purchases or other major decisions.