Understanding French inheritance laws is crucial for foreigners who own property or reside in France. These laws differ significantly from common law systems and can have substantial implications for estate planning. This comprehensive guide will help you navigate the complexities of French succession laws and protect your interests.
Understanding French Inheritance Laws
French inheritance law is based on the principle of forced heirship (réserve héréditaire). This principle limits testamentary freedom by guaranteeing a share of the inheritance to certain heirs. Indeed, it determines how much of the inheritance should go to children or other reserved heirs, leaving the testator limited freedom to dispose of the rest of the inheritance.
This system, based on the idea of equity and protection of reserved heirs, is a major feature of French law. This approach can present a challenge for foreigners who, in their home countries, generally enjoy complete freedom to dispose of their property according to their wishes.
Basic Principles of French Succession Law
French law has established particularly strict rules regarding successions. One of the most striking features of French succession law is the principle of forced heirship. This public policy provision requires the deceased to guarantee a portion of the inheritance to the heirs known as the reserved heirs. In other words, the provisions of a will should not reduce the amount of the reserve.
The children are considered reserved heirs, meaning they are entitled to a share of the inheritance that cannot be reduced by the deceased’s will. The size of this portion depends on the number of children of the deceased:
- A child : 50% of the inheritance is reserved for him.
- Two children : 66.66% of the inheritance is reserved, or 33.33% for each child.
- Three or more children : 75% of the inheritance is reserved, this portion being divided equally among the children.
In the absence of descendants coming, the non-divorced surviving spouse may also be considered a reserved heir. This right is granted even in the presence of other heirs, but is limited by the number of reserved heirs present.
Legal basis : Articles 913-1 and 914-1 of the Civil Code
Spouse’s Rights in French Inheritance
French law recognizes the non-divorced surviving spouse as legal heir, which confers rights in the succession of his or her deceased spouse, even in the absence of an agreement between the spouses. This inheritance status can be confirmed by a judgment that has acquired the authority of the matter adjudicated.
- Presence of Descendants
When the deceased leaves descendants who are all from his union with the surviving spouse, the latter has several options regarding inheritance :
- Usufruct of all the assets composing the estate
- 25% ownership of the estate’s assets
Legal basis : Article 757 of Civil Code
- Absence of Descendants
- The deceased leaves both parents : the surviving spouse inherits 50% of the estate since the other half is being shared between the father and mother.
- The deceased leaves one parent : the surviving spouse collects 75% of the estate.
Legal basis : Article 757-1 of the Civil Code
- Absence of Descendants and Parents
In the absence of children or descendants of the deceased, as well as his or her father and mother, the surviving spouse inherits the entire estate. However, there are two exceptions to this principle:
- Maintenance claim of ordinary ascendants against the estate of the deceased : This claim must be made within one year of the death or when the heirs cease to provide the usual maintenance benefits to ascendants.
- Legal right of return on half of these property for the deceased’s descendants or privileged collateral (if the deceased received property by donation or succession from his or her descendants)
Legal basis : Articles 757-2, 757-3 and 758 of the Civil Code
Impact on Foreign Will-Makers
Since 17th August 2015, European Regulation No. 650/2012 (also known as Brussels IV) has significantly facilitated the management of international estates, notably by making the law applicable to the estate predictable. Indeed, this regulation allows foreign nationals to choose the law of their nationality to govern all their estate, including their property located in France, instead of the law of their habitual residence.
EU Succession Regulation Rules
The law applicable to all of the deceased’s property is the law of the State in which he was habitually resident at the time of his death or the national law of his choice :
- The law of habitual residence : All property of the deceased is governed by the law of the State where the deceased habitually lived (resided on a stable and permanent basis) at the time of his death.
- The Chosen National Law : The deceased may choose the law of his country of nationality to govern his entire estate. This choice can be made either at the time when the deceased draws up his will or at the time of his death. In the case of multi-nationality, the deceased may opt for the national law of the State which he considers most appropriate.
Legal basis : Articles 21 and 22 of EU Succession Regulation
EU Succession Regulation Benefits
The European Succession Regulation has several advantages for international successions :
- Ability to choose national law to govern succession
- Unified treatment of the entire estate under one law : The EU Regulation allows a uniform treatment of all the assets of the deceased as well as all the phases of the succession regulation under a single law. It simplifies the management of the estate.
- Greater planning flexibility for international estates
- Potential to avoid forced heirship rules : Foreign nationals can choose to apply the law of their nationality to their succession instead of the French law and avoid forced heirship rules.
Inheritance Tax Considerations
French inheritance tax rates and thresholds vary significantly depending on the relationship between the deceased and the heir. Understanding these implications is crucial for effective estate planning.
Key Tax Rates and Thresholds
Inheritance tax in France depends on the degree of kinship between the deceased and the heir, as well as the value of the inheritance. Exemptions and reductions are granted based on the proximity of familial ties, while progressive rates are applied beyond abatements.
Exemptions and reductions
Inheritance taxes are calculated after applying the exemptions and reductions specific to each category of heirs. The amount of inheritance that can be exempt from tax depends on the degree of kinship between the deceased and the heir :
Surviving spouses and partners of PACS : Total exemption from inheritance taxes.
Legal basis : Article 796-0 ter of the CGI
Children (or descendants) : Each child benefits from a deduction of €100,000 on the share of inheritance that belongs to him.
Legal basis : Article 779, I of the CGI
Brothers and sisters : A reduction of €15,932 is applied to each sibling’s share of inheritance.
Legal basis : Article 779, II of the CGI
Other family heirs (nephews, nieces, etc.) : A reduction of €7,967 applies.
Unrelated heirs : There is no reduction for heirs who are not related to the deceased.
Tax Rates
Once the deductions are applied, the inheritance tax is calculated on the net share of the inheritance and the progressive rates vary according to the kinship and the amount inherited :
- Children or parents online directly : It is set to 5% to 45% depending on the share of inheritance after deduction.
- Brothers and sisters : It is set to 35% or 45%, depending on the share received.
- Other family members : It is set to 55%.
- Unrelated heirs : A flat rate of 60% applies.
Transfers between spouses and PACS
Transfers of wealth between spouses or partners benefit from favourable tax rules. Indeed, gifts and estates between them are exempt from inheritance tax.
However, gifts made during their lifetime are subject to tax after a deduction of €80,724. Beyond this deduction, progressive rates apply.
For more information on the fees to be paid on an estate, you can refer to the official website of the French government. and the official website of the French Ministry of Economy.
Planning Strategies
Several legal tools and structures can help optimize your estate planning under French law :
Marriage contracts (“contrat de mariage”) to protect assets
A marriage contract can be used to protect certain assets and organise their distribution in the event of death. In France, spouses can choose from several matrimonial regimes such as separation of property or universal community to tailor their financial situation to their specific needs. This choice can have a significant impact on the rights of the surviving spouse and on the distribution of assets.
Tip : The universal community system with a full attribution clause allows the surviving spouse to keep all the common property without inheritance rights.
Life insurance policies (“assurance-vie”) for tax-efficient wealth transfer
Life insurance is an essential tool for tax advantage since sums paid to a designated beneficiary are generally exempt from inheritance tax within the limits set by law.
Advantages of life insurance:
- Direct transfer of capital to designated beneficiaries
- Flexibility in designating beneficiaries
- Tax optimization for large estates
- Property ownership structures (SCIs) for real estate
Le Sociétés Civiles Immobilières (SCI) are particularly useful for arranging the transfer of real estate. By gradually transferring SCI shares to your heirs through donations, you can reduce inheritance taxes while retaining control of property management :
- Facilitating the collective management of real estate.
- Fractionation of donations to benefit from regular tax rebates.
- Possibility to limit conflicts between heirs.
- Careful drafting of wills to comply with both French and home country laws
A carefully drafted will is essential to ensure that your estate is distributed according to your wishes, while respecting the rules of reserve of inheritance imposed by French law. Foreigners must ensure that their will complies with both French law and that of their home country, taking into account possible conflicts of laws.
Tip : If it offers more flexibility, use the provisions of the European Succession Regulation (Brussels IV) to choose the law of your nationality.
Frequently Asked Questions
- Can I completely disinherit my children under French law ?
No, French forced heirship rules prevent complete disinheritance of children. However, you may be able to apply your national law under the EU Succession Regulation to avoid these restrictions. Read more about the disinheritance of your children here. - How does French inheritance tax work for non-residents ?
Non-residents are subject to French inheritance tax on assets located in France. Tax treaties may affect how these taxes are applied and whether double taxation occurs. - What happens if I don’t make a will in France ?
French intestacy laws will apply, which follow strict rules about inheritance based on family relationships. This may not align with your wishes for asset distribution.
Conclusion
French inheritance laws present unique challenges for foreign will-makers, but understanding these rules and planning accordingly can help protect your interests and those of your heirs. Given the complexity of French succession laws and their interaction with international regulations, seeking professional legal advice is essential for creating an effective estate plan.
Important: This article provides general information only. For specific advice about your situation, consult a qualified French inheritance law specialist or notaire.
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