French
///Estate
Planning
we can provide you with the expertise
When you own assets in France, or when you are French resident, it is always best to ensure that any testamentary disposition you have in place purposefully take your French assets and/or French residency into account, to avoid your loved ones and Personal Representatives having to deal with unexpected tax liabilities or procedural hurdles on your death.
We often find that there is a lot of confusing and contradicting advice out there when it comes to cross border estate planning, and the reason for this is that most legal advisors will often recommend solutions that are perfectly suitable in their own country (for example an usufruit in France, or a Trust in England) but without taking into account the impact it could have abroad. As cross-border legal professionals, we are uniquely qualified in that we can provide you with the expertise to recommend a solution that works as intended in both countries, and can then work on implementing it, giving you reassurance that all aspects of your estate planning have been carefully considered.
French Matrimonial Regimes
One specificity of civil law countries is that they have in place a system of matrimonial regime. This is a set of rules which govern how a married couple owns and manages their assets during their lifetime, and will always need to be considered on the death of a married spouse, due to the fact that the matrimonial regime must first be administered, before the nature and extent of the death estate can be fully ascertained.
We can advise on which French matrimonial regime applies to you, how this will affect the administration of your estate in France, and also whether you can change your matrimonial regime and the options available to you.
French Will / Donation entre époux
Very often, you will be under the impression that you require a French Will (which would be either a French holographic – handwritten – Will or a French authentic Will signed in the presence of a French Notaire) to deal with your French assets. That is not always the case, and it will usually depend on your specific circumstances and wishes. We would be pleased to speak to you to gain a better understanding of your objectives, and advise as to whether a French Will is the most suitable option, taking into account issues of applicable law and administration procedures.
Your Notaire may also recommend something called a donation entre époux. This is a hybrid type of Deed which can be summarised as being a “lifetime gift between spouses which only takes effect on death” and will set out what inheritance options the surviving spouse will have on first death. This type of document is often very helpful in a pure French context as it allows enhanced inheritance rights for the spouse (but still limited by French forced heirship), but we find can be unsuitable where there are cross border elements. We can advise as to whether this is the best option for you, or whether there are other alternatives which would best meet your requirements.
Choice of law / Brussels IV Will covering French assets under the European Succession Regulation
Many of our clients are unhappy with the restrictions that are placed on them by French law in terms of planning their estate, and would prefer to avoid them. Since August 2015, it is possible to rely on the European Succession Regulation (also known as Brussels IV) to instead opt for the law of your nationality to apply to your worldwide estate. For a British national most closely connected with the jurisdiction of England & Wales, this allows for enhanced testamentary freedom, which is most often desired to ensure that the surviving spouse inherits the worldwide estate on first death, and the children only inherit once both spouses have gone (which even if you do not wish to fully disinherit a child, can be the most tax efficient way to structure your estate in England to make full use of the transferable nil rate band).
When a choice of English law is the most suitable option, in our opinion this can be implemented very simply by having a single English Will covering assets both in England and in France, and since 2015 we have developed specific wording to be added in such Wills to ensure that they are easily applied in France at the time of administering the estate. However, a choice of English law is not always required or doesn’t always have the full intended effect, and potentially can have some unintended tax consequences in France. We will always walk you through your options and make recommendations based on your specific wishes and circumstances.
Divorce / Separation
Divorcing or separating is never an easy process, and it can be made even more complex when you own assets in France that must be taken into consideration. We would always recommend that advice is taken at the outset and before coming to any agreement as regards what should happen to the French assets, as very often a transfer in France as part of a divorce or separation is subject to a high taxation, and the timescales can be quite long.
We would be pleased to advise on the following:
Carrying out research with the French Land Registry or French Companies House to ascertain ownership of assets in the context of a financial disclosure
Advising in connection to French matrimonial regimes and marriage contracts
Advising on the options available to the couple as regards the transfer of French assets, including applicable taxes, costs and timescales
Advising on the wording of the Consent Order or Financial Remedy Order to ensure that they can be applied in France as expected
Instructing the relevant parties in France and oversee the transfer to completion
Société Civile Immobilière (SCI) – French property holding company
SCIs are a popular French property ownership structure, though very often come with an additional layer of complexity especially when the shareholders are based outside of France, due to the fact that the property is owned by a French-registered company, rather than outright.
If you own your French property through an SCI with other shareholders, you must comply with the SCI’s Statuts (Articles of incorporation) for any decision in connection with the SCI and its assets, including any transfer of shares, which can sometimes be very restricted or follow a strict procedure. Selling a property owned by an SCI can also be subject to additional requirements and taxes in France, especially if the SCI is to be liquidated and the sale proceeds distributed to the shareholders on completion of the sale.
We can advise on the following:
- Whether an SCI is the most appropriate structure to own your French property, and if not what other options are available, taking into consideration your specific objectives
- Setting up an SCI and transferring ownership of a French property to an SCI
- Transfer of shares between shareholders (either for consideration, or as a lifetime gift)
- Transfer of shares to a third party (either for consideration, or as a lifetime gift)
NB: if you are UK resident, the sale by the SCI of a property or the sale of your SCI shares may trigger a UK capital gains tax liability. We do not advise on this and you will need to obtain separate advice in this respect, including as to whether any double taxation relief is available, where relevant
Buy-outs between co-owners / forced sale of French property interest.
There may be cases where you own an interest in a property in France together with other parties, and wish to now exit. This can happen for example where you bought a property with friends, or inherited a property together with a parent/sibling. We would be able to advise on the following:
A buy-out by your co-owners (a licitation faisant cesser l’indivision where a single owner will remain, or a licitation ne faisant pas cesser l’indivision where the property will remain owned by more than one owner), including where the parties wish for the sale price to be paid to the exiting owner in sterling
Whether you can sell your interest to a third party
Your options on forcing a sale, if your co-owners do not wish to buy you out and a third-party sale is not possible.
NB: if you are UK resident, the disposal of your interest in a French property may trigger a UK capital gains tax liability. We do not advise on this and you will need to obtain separate advice in this respect, including as to whether any double taxation relief is available, where relevant
EXPERT LEGAL ADVICE
Our French Experts
Marc White
Solicitor, Notary Public & Accredited Mediator
Madeleine Carin
French Paralegal
Léa Maynard
French Lawyer & English Solicitor