Anyone who has dealt with a probate in England will be familiar with obtaining a grant of probate if there is a will and letters of administration if there is no will. Broadly speaking in England the executors or administrators of the estate are obliged to pay any inheritance tax which may be due and are then able to apply to the court for a grant of probate or letters of administration which allow them to wind up the estate. Once you have the grant of probate or letters of administration you are able to sell the deceased’s assets as the owner. The key point is that the assets do not vest directly in the heirs but are vested in the executors or administrators.

Estate vests direct in the heirs

The position in France is very different. On death the assets vest direct in the heirs. There is no executor or administrator and this has the following implications. All beneficiaries under either the will, intestacy provisions or a combination of the will and forced heirship provisions will receive their share outright even if they are minors or lack capacity for any other reason, such as dementia. Also French inheritance tax is paid not by the estate but by each beneficiary on the shares that they receive. The inheritance tax is payable at rates and taking into account tax free allowances which depend on the relationship between the deceased and the beneficiary. For example, there will be a reduction in inheritance tax where a beneficiary has a large family. The transfer of assets between spouses is now tax free in France, however the rates do rise to 60% inheritance tax where the parties are not directly related to each other. Non-related parties include cases in which the deceased is the step-parent of the beneficiary.

Administering the estate

In England it is possible for any adult to administer the estate and in practice it is now relatively rare for solicitors to be appointed as executors. In France most families appoint a notaire who deals with the estate on behalf of all the beneficiaries. It is not compulsory to appoint a notaire, although a notaire will be required if the estate includes any real estate. However, if no notaire is involved all the beneficiaries will need to act unanimously at all times. It is for this reason that it is often more practical to go through a notaire.

Problems can arise where the deceased’s will did not take into account forced heirship provisions, likewise some assets which would in principle fall outside an estate, for example, certain types of life assurance, may be reunited with the estate on the grounds that they were primarily an estate planning measure.

Procedure after death

After the death generally the family of the deceased arrange to meet the notaire. They will provide the notaire with the usual information such as where the deceased banked and had various assets. The notaire who then writes to all the various organisations will establish who will inherit based either on the intestacy provisions in France, the will or a combination of the will and the forced heirship provisions. The notaire gathers in the assets on behalf of the estate and then will ultimately distribute them between the beneficiaries when all the known debts have been settled. The first document to be signed is generally an acte de notoriété. In this document two witnesses (who are not beneficiaries or their spouses) declare that the deceased left XYZ as family and so forth. There is no equivalent to this document in England.

Inheritance tax

After this the inheritance tax return is filed. This will set out a summary of the assets left to all the beneficiaries and then calculate their share in the estate and the tax payable on it. It is the beneficiaries who must sign the declaration and not the notaire. In principle this should be filed within six months of the date of death, an extension to 12 months is permitted where the deceased died outside of France. It is often possible to pay the inheritance tax out of assets collected in by the notaire and this is a significant advantage over the normal procedure in England. Once the tax return has been sent to the tax authorities, it is common for the assets to be divided between the family members or beneficiaries in accordance with the deceased wishes.

One point to note is that the tax free allowances available on death in France are the same as those available for a lifetime gift. Therefore if they have been used up in the 10 years preceding death, they will not be available to deal with the estate. It is therefore usual for the notaire to make enquiries of the family as to any substantial gifts that have been made within the previous 10 years.

David Anderson is solicitor and chartered tax adviser and Nicole Gallop Mildon is solicitor and former clerc du notaire at Sykes Anderson