Inheritance - your questions answered

WE would like to thank the many readers who have sent in inheritance-related questions following Grégory Denoyelle’s December article and our questions and answers in January. The topic

continues to attract a lot of interest. We will be publishing more questions and answers in the April edition.

Laurent Cozic, a partner in the Groupe Monassier, Dinard (www.notaires-dinard.com) replies:

As we are talking about real estate in France, French inheritance laws apply. The law protects descendants by reserving a minimum portion of inheritance for them.

If there are four children the reserved portion is three-sixteenths per child. It is, however, possible to make a will or gift allocating specific property (such as a house) to the children

with whom the mother is in contact, who would then be obliged to share out a monetary sum with the absent sister to the value of her entitlement under the inheritance laws.

This may simplify matters after the mother's death so that, for example, the other children are not left in a situation of common ownership of real estate with their sister.

It is also possible for the sister to renounce her part of the inheritance while your mother is still alive. This would require a deed (acte authentique) to be drawn up by a notaire, in

France and for it to be the sister's wish that this be done. Known as a RAAR, this is irrevocable, and expresses the will of the person renouncing the inheritance.

If this person is not contactable or refuses to come to France to sign such a document, this option is not possible.

After the mother's death, should it be impossible to contact the sister, it will be necessary to arrange, through an avocat, for the inheritance to be shared out by a court among the other

heirs. You need to discuss this with a notaire. The costs will vary according to the solution.

Grégory Denoyelle, a notaire from Saint-Omer, Pas-de-Calais (gregory.denoyelle @notaires.fr) replies:

French Civil Law governs inheritance of any real estate located in France and of money held in any bank accounts. This also applies to any French or non-French investments such as shares and

bonds.

Laurent Delanoë, a notaire from Salins-les-Thermes, Savoie ([email protected] or www.dsdnotaires.fr) replies:

If you decide to transfer the ownership of your French house from yourselves as individuals to the British company which you own jointly, beware of the capital gains tax liability of the

said company at the time of the sale.

Besides the possible tax and legal advantages from an English point of view, the capital gains tax regime for foreign companies in France is very specific and disadvantageous.

The fee for undertaking this transfer would depend on the type of company.

Rémy Landreau, from the notarial office of Gérard Kaeufling in Saint-Priest, Rhône, replies:

You are not obliged to designate all your nephews and could choose just one of them. Unfortunately, they would have to pay the 55% of tax.

Creating an SCI will not help because it does not change the level of inheritance tax and it would cost you a lot (setting up the company, capital gains to pay, accounting and legal

aspects).

The best solution would be to give the house to all or only one of your nephews, reserving the usufruit for yourself (right to live in it).

When you give the house away while you are still alive, you benefit from a tax reduction of 10%.

Francois Trémosa, a notaire with the Groupe Monassier in Toulouse replies:

You and your notaire were careful enough to structure your situation when you bought your estate in France: it is always more costly and complicated, to deal with the situation once the

purchase has happened.

In your case, the surviving spouse will become the sole owner of the house, thanks to the "tontine" clause, and he/she will be able to sell your house (via a “viager” if desired) and

downsize or return to the UK.