Part 3 / Inheritance planning in France, some more questions from FBN followers скачать в хорошем качестве

Part 3 / Inheritance planning in France, some more questions from FBN followers

Tharwat Mansour, FBN board member, chats with Christophe Dutertre on the subject of inheritance planning whilst living in France. To contact Christophe directly to assist you with your needs 1) What are the disadvantages of a married couple buying a property 'en tontine' A tontine arrangement, where the property passes entirely to the surviving owner, has several crucial conditions: Age Difference: The co-owners' age difference should ideally not exceed 15 years. Contribution: An unequal contribution (e.g., 80/20) to the purchase price could be challenged. Marital Regime: A tontine is generally only valid if the couple is married under a separation of ownership marital regime. Disadvantages of the Tontine High Tax for Stepchildren: While the property passes tax-free to the surviving spouse, when that spouse dies, stepchildren (children not biologically related to the second deceased spouse) face a 60% inheritance tax rate after a minimal tax threshold (€1,594). Being "Stuck" (During Life): The tontine does not create standard co-ownership. If the couple separates or divorces, the owners are "stuck" and cannot force a sale of the property without the other co-owner's agreement. Legal action may be required to resolve the situation. 2) Will money left to English charities in our wills be subject to French Inheritance Tax? Is there Capital Gains Tax to pay after death for your heirs? Non-EU Charities: Due to Brexit, UK-registered charities are no longer exempted from French inheritance tax. They would face the highest tax rate of 60%. To avoid this tax, an individual should leave assets to a French registered charity (association) or a UK charity with a branch registered in the EU. 3) Is there Capital Gains Tax to pay after death for your heirs? You pay inheritance tax when you inherit a property. You pay Capital Gains Tax only when you resell the inherited property at a higher value than its declared value at probate.If the inherited property is established as your main residence, it is generally exempted from CGT upon sale. 4) Is there any way to avoid my step daughter being liable for 60% inheritance tax if my husband dies before me? Avoiding the 60% inheritance tax for a stepdaughter who is to inherit from her stepparent is very difficult. The only way to potentially mitigate this is for the stepparent to transfer their assets to their spouse (the stepdaughter's parent) while alive, allowing the entire estate to eventually pass under the more favorable parent-child tax rates (max 45%) rather than the 60% stepchild rate. 5) I should like to pass my home to my 3 grown up children but don’t know the tax implications Option 1: Outright Gift Now (Not Recommended): Gifting the full property now means the children would use their combined tax-free allowance of €300,000 (€100,000 per child), paying 20% tax on the excess value. Option 2: Gift with Life Interest (Démembrement): This is the more recommended option. The parent retains a life interest (usufruit) (the right to live in/use the property) and gifts the bare ownership (nue-propriété) to the children. The taxable value of the gift is reduced by the value of the life interest, which is calculated based on the parent's age. Gifting Property to Children (French Resident) For a French resident wishing to transfer a home to their children, the optimal strategy involves reducing the taxable value: Best Option: Retain a Life Interest (Usufruit): The parent retains the right to live in the home (usufruit) while gifting the bare ownership (nue-propriété) to the children. Tax Advantage: The value of the retained life interest (based on the parent’s age, e.g., 40% in their 60s) is deducted from the property’s value for tax calculation. This reduction, combined with the children's €100,000 per child tax-free allowance, can make the property transfer tax-free. Single, Childless Homeowner Options For a single, retired person without children, they have full freedom to dispose of their estate: Property: Leave to a French registered charity to avoid the 60% tax that friends or unrelated individuals would face. 00:00 - 1:28 Introduction 1:29 - 8:35 The disadvantages of a married couple buying a property 'en tontine' 8:36 - 10:15 •Will money left to English charities in our wills be subject to French Inheritance Tax? 10:16 - 11:40 Is there Capital Gains Tax to pay after death for your heirs? 11:41 - 14:32 Is there any way to avoid my step daughter being liable for 60% inheritance tax if my husband dies before me? 14:33 - 18:38 I should like to pass my home to my 3 grown up children but don’t know the tax implications 18:39 - 21:50 We are British citizens, French residents. If no significant part of our estate is outside France and we are happy to have it divided between our children (in the UK), do we actually need a will