Sheila and Ian fulfilled an
ambition last December when they bought a long-neglected
property near the popular cathedral city of Coutances, a
stone’s throw from the Normandy beaches. “We had looked
at property in France for a few years,” Ian says. “We
came across this dilapidated stone and timber house with
a third of an acre of land and a stone barn which we
both fell in love with immediately. We bought it on
first viewing.” Ian, 55, a company director, and his
wife Sheila, 57, plan to spend as much time as they can
doing it up, so they can sell their house in North
Yorkshire, and buy a smaller home in Britain in order to
enjoy a “semi-retirement” split between the two
properties.
Ian and Sheila each have two grown-up
children from previous marriages. They own the French
house jointly and their two properties will be the
inheritance for Sheila’s daughters - Stephanie, 37, and
Charlotte, 32 - and Ian’s daughters Emma, 33, and Katie,
31.
In what seems like a perfectly logical desire
from a British viewpoint, if either partner dies, they
want the survivor to enjoy sole rights over the property
and for it ultimately to pass in equal shares to all
four children. But while it is straightforward to
arrange this with their property in England simply by
drawing up a will to express their wishes, the Normandy
home is subject to French inheritance laws - and they
are different. The Napoleonic French law insists that
property is inherited by your bloodline. Indeed it is
virtually impossible to disinherit a child in
France.
So how can you leave your property to one
child but not to another? Can you and your new partner
leave the house to your joint children but not those
from previous marriages? Or ensure that all your various
children inherit equally?
Under the French system,
married couples can do what they like with their house
until one partner dies. Immediately, the deceased’s
children (or, if there are no children, their relatives)
inherit a share - and thus the surviving spouse would
need their agreement to sell or even rent out the
house.
Like Ian and Sheila, most British buyers
want to ensure that the surviving partner fully owns the
house and that only after the second partner’s death do
children inherit or have any say over what happens to
the property. This is fairly simple for married couples
who have only children in common: they can delay their
children’s inheritance by setting up a clause tontine or
a communauté universelle. But it becomes complicated
when children from previous relationships are involved -
often the case with British buyers. Ian and Sheila’s
notaire has told them that what they want is not
possible. They cannot arrange it so that when one dies,
the other owns the property - and when that partner
dies, all four children will inherit equally.
They cannot use a communauté universelle,
because their children are from previous relationships.
And if they opt for a tontine, only the survivor’s
children will inherit. Because each parent has two
children, French law dictates that each child must
inherit a third of their parent’s part of the property.
Each parent could make a will leaving their remaining
one third to the other’s children, but this would not
give all four children equal shares. What’s more,
because the inheritor is not a blood relative, the
taxman would take 60 per cent of their legacy. “That
makes a mockery of leaving it to them in the first
place,” says Ian.
However, there may be ways that
they can get very near to what they want to achieve,
according to Marcel van Peteghen, of Anglo French
Lawyers. “A possible solution may be to protect the
surviving spouse with a life interest trust in the
property,” he says. “There are a number of other ways in
which provision can be made. It is possible, for
example, for the surviving spouse under certain
circumstances to have absolute ownership of the movables
such as funds in bank, cars, etc.” However, van Peteghen
stresses, the solution that suits one family may not be
suitable another. You may know friends who appear to
have found the perfect solution but your notaire shakes
his head and says it can’t be done. This is because
notaires, who are not the same as solicitors but whose
role is to ensure that agreements and transactions are
carried out “according to French law”, interpret the
law. And they may have different interpretations from
one another, or interpret the same laws differently,
according to the individual circumstances in each case.
So make sure you find a notaire who is sympathetic to
exactly what you want to achieve and give them as much
information as you can to help them understand your
particular circumstances. Remember: the final package
will always have to be agreed with your notaire. So, if
you are taking advice from, for example, a UK specialist
in French law, make sure that they have a good working
relationship with the notaire, who will have to approve
anything they recommend.
What it all means
A clause tontine must be
inserted into the deeds when you buy the house. It can
be used by married partners, civil partners or friends
buying a house together. The tontine means that the
ultimate survivor is retrospectively considered to have
been the sole purchaser/owner of the property. Using a
tontine where you do not have only children in common
makes it almost impossible to predict who will
ultimately inherit. Basically, it depends on who dies
first.
The communauté
universelle is suitable only for married couples
with no children from past relationships. When you marry
in France, you opt for either a séparation des biens -
where what you own remains yours - or a communauté
universelle, where you share your worldly goods. When
the first person dies, the survivor owns everything; on
the death of the second spouse, it goes to the
children.
British buyers can adopt a communauté
universelle. If you reside in Britain, it will cover
only your French property, but British couples in France
can use it either for property there or for all their
worldly goods. You can adopt the communauté universelle
even after buying your house and although the end result
is much the same as a tontine, the tontine covers only
the houses where it has been put into the deeds, whereas
the communauté universelle applies to all homes you own
and any you may buy in future.
Give, take and tax
Under French law, you are obliged to pass on a
proportion of your property to your children. If, for
example, you have two children, they inherit two thirds
- that is, a third each; if you have three children,
they inherit three quarters (a quarter each). If you
have more than four children, they inherit three
quarters between them - in other words, you always have
a quarter to dispose of as you wish.
However,
although you can do what you like with the remaining
share, if you will it to a non-relative, they pay 60 per
cent inheritance tax. In France, inheriting from a
non-blood relative can be expensive.
The
remaining share is generally left to the spouse, so that
it reaches the children eventually, although you are not
obliged to nominate a spouse as successor.
Where
there are no children, the property goes to the wife,
parents, siblings, nephews and nieces, and cousins in
that order.
Civil partnerships - PACS, in French
- enjoy more or less the same rights these days as
marriages, but the PACS must have taken place in France.
In a first marriage, the surviving spouse has a
right to remain in the property during their lifetime.
In the case of a second or further marriage, this is not
automatically the case because if there are children
from past relationships who have inherited, they may
have no blood connection to the surviving spouse and
therefore no duty towards them.
Who gets what…
John and Suzanne married when Adam, her
child from a previous relationship, was a baby. John has
brought him up as his own. They want Adam, now in his
teens, to inherit the French house.
MaÎtre
Patrick Durel, of the Chambre des Notaires du Calvados,
says: “Using a tontine to protect the surviving spouse’s
lifetime interest in the property could leave Adam with
everything [if John dies first] - or nothing [if Suzanne
dies first].” French couples can get round this with an
adoption simple. This allows you to adopt your spouse’s
children in order to nominate them as heirs but does not
alter their relationship with their natural
parents.
However, this option is only available to
non-French residents whose own national law has a
similar system - so it is not available to British
residents of France.
“John and Suzanne could make
a donation entre époux, which would mean that John’s
share goes to his wife and her share is divided between
Adam and John. Then, if John dies first, the child will
inherit the house through his mother.
“If she dies
first, however, her share will be divided between John
and Adam, with John’s share eventually going to his
relatives. He could make a will to leave part of his
share to Adam but, with 60 per cent inheritance tax to
pay, you are virtually leaving it to the state. It is
essential that John dies first.”
…how, why and
when
Jack and Yvonne have two children each
from previous marriages but want only his children to
inherit the French house, as Yvonne’s children will be
well provided for in their father’s will.
MaÎtre
Durel says: “This is impossible under French law.
Whether you want to cut them out because they are well
provided for elsewhere or because you haven’t seen them
for 40 years, you cannot disinherit your
offspring.
“They cannot use a communauté
universelle as their children are not their joint
children. With a tontine, if Yvonne dies first, Jack’s
children will inherit - but if Jack dies first, Yvonne’s
will inherit everything.”
To find an English-speaking notaire,
go to www.notaires.fr;
Anglo French Lawyers: 0844 88 44 704 www.anglofrenchlaw.co.uk
Article extracted from www.telegraph.co.uk1/9/08 |
