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Be warned - The Legal situation in France regarding property
ownership is very, very different to the UK. French succession
law and is its provisions may come as a surprise to English
buyers who are used to the idea of leaving property via wills.
Family situations are often complex these days, with second
marriages, step children and so on and provisions usually need
to be made at the time of purchase to avoid difficult circumstances
later on.
 The
usual method of joint ownership in France is that of indivision.
This means that each spouse owns half the property, rather similar
to the tenants-in-common situation in England. If a married
couple want to buy a property together, they usually want the
survivor to have ownership of the property after the first death.
This will not automatically happen as the legal nature of the
indivision method means that when the first spouse dies, at
least half their French estate must go to that person’s
children. The remaining spouse therefore does not have freedom
to do with the property as he or she wishes.
There are alternative options for tackling
the inheritance and succession rules. The important thing to
bear in mind is that you need to do any planning before you
purchase and not after. We can advise you and put you in touch
with an English speaking Notaire who will be able to assist
you with a French Will, effecting a 'Clause tontine' if applicable,
or a change of matrimonial regime if applicable. Whatever you
decide to do, there is likely to be an imact upon the eventual
effect of the Inheritance tax situation, so that should be taken
into account as well.
 Inheritance Tax is more demanding than its equivalent in the
UK. There is potentially tax paid upon first death in France,
unlike Great Britain where IHT does not impact upon married
couples until the second death. Nil rate bands are much less
generous than in the UK, although they have been improved in
2005. Tax can be payable at up to 60%, so unmarried couples
especially need to plan financially for a sizeable amount of
their property/estate to go to the taxman, unless proper precautions
are put in place.
Those who decide to go and live in France permanently will
find that their worldwide assets are then subject to French
succession law as opposed to just the French real property.
In these circumstances, it would almost certainly be worth adopting
an appropriate marriage regime.
Another useful solution to some family situations
is to set up an SCI. An SCI is a company set up for the management
and letting of property. If the property is bought by the SCI,
the members of the SCI own shares rather than property. As shares
are considered to be personal property, not real property, then
English succession law applies and the shares can be left in
accordance with the deceased’s wishes.
To make sure that your arrangements work to
your advantage rather than against you, contact Peter
Elias to arrange the most appropriate cover. |
