The French estate of an English client: practical aspects

A case study handling the issue of inheritance between England, Wales and France

We are to consider the inheritance of the estate of an Englishman deceased in England and owning property in France. The deceased left a will in which he bequeathed all his estate to his wife and failing this, to his three children.There are two aspects to this case: the legal, or civil law aspect, and the tax aspect.

The legal aspectIn accordance with the French rules of private international law, the succession of moveable property is governed by the law of the deceased’s domicile at the time of death and the succession of immoveable property is governed by the law of the country where the property is situated.

In this case, therefore, property held in France by an Englishman deceased in England is devolved in accordance with French law. Consequently, the estate can only be bequeathed to the surviving spouse within the limits of the disposable portion. In the presence of children, this is considerably reduced.

Any property which is governed by French inheritance law (which is the case) cannot be freely disposed of by will. There exist three classes of heir who possess an inalienable right to a proportion of the property (the ‘héritiers réservataires’)

1) The surviving descendants;

2) If there are no surviving descendants, the surviving parents; and

3) If there are no surviving parents, the surviving spouse.

The proportion of the property which is inherited as of right by the ‘héritiers réservataires’ is known as the ‘réserve légale’. The size of this reserved portion varies according to the number of heirs: if there is one surviving child it will amount to one-half of the estate; two-thirds of the estate if there are two surviving children; and three-quarters if there are three or more children.

In this case there are three children and the size of the reserved portion is three-quarters of the estate.

Once the size of the ‘réserve légale’ has been established, the remainder of the estate, (the ‘quotité disponible’, or disposable portion) can be disposed of as the owner wishes, that is, by will.

In our case, the deceased appointed his wife as the main beneficiary by English will.

According to French law, there is a special facility between spouses so that the share left to the surviving spouse is not a fixed share, but is one of three options. Either the testator or the beneficiary can choose between these options.

The current provisions of French law provide that the rights of the surviving spouse cannot exceed: where there are children

• An absolute interest (full ownership) in the disposable portion of the estate (one-quarter in our case);
• or a life interest (or ‘usufruit’) in the whole estate;
• or a quarter of the estate absolutely with a life interest in the remainder (which is in fact the highest share).

The surviving spouse may therefore choose to receive one of the above rights. This choice will of course determine the rights of the children.

To summarise, should the surviving spouse wish to extend her statutory rights (a life interest in the estate or one-quarter in full ownership) up to one-quarter plus the usufruit of the remainder, she may need to use the English will.

An usufruit would enable the surviving spouse to occupy, enjoy and even rent the property, in whole or in part, for the rest of her life, but would bestow no right of ownership of the property and therefore no right of sale.

A spouse who enjoys a life interest in the whole of the property cannot be forced to consent to a sale by the children. The surviving spouse could, however, choose to sell the life interest, which is, however, not very common.

It is sometimes not opportune to split the ownership between the surviving spouse and the children. Should the spouses wish to leave the whole property to the surviving spouse, it may be necessary to anticipate the issue and organise the structure of ownership in another manner. This should be done at any time before the death.

FormalitiesAny formalities regarding the will itself will be governed by the law of the country where the will is found; in this case English law. The will will therefore have to be certified by the Probate Division of the High Court. The High Court will then issue a Grant of Probate.

It will then be necessary to give its effect in France at the notaire’s office. The notaire will require a copy of the will, a translation and a copy of the grant of probate, together with its translation. All theses documents will need to be legalised with the apostille seal in accordance with the Hague Convention of 5 October 1961. There is however no need to have a certified translation.

Should the grant of probate not specify the capacity of each heir, the notaire might draft an ‘acte de notoriété’ to declare who the legal heirs are.

According to article 1000 of the French civil code and 655 of the French tax code, the notaire will then register the French deed at the local registration office (where the property is situated).

Having a French will or anticipating the death by structuring the purchase will then mainly simplify and reduce the legal process at the time of the death.

The tax aspectWhen French property is transferred on the death of the owner, French inheritance tax should be paid.

This is subject to the convention between France and Great Britain. French property and shares of an SCI holding property situated in France will be taxed in France. Property in England will be taxed in England. Bank accounts and other moveable properties situated in GB will be taxed in England, that being the deceased’s last domicile (article 5 of the F/GB double tax treaty of 21 June 1963).

The settlement of the estate in France, concerning a person who dies domiciled in England, will only include assets which are subject to tax in France, in accordance with the above mentioned convention (immovable property or physical moveable property in France). French bank accounts will be included in the estate settlement in England along with the deceased’s immovables and other assets subject to tax in England according to the convention, namely, bank accounts in England.

It is, however, very important to note that, in accordance with the double tax treaty, any tax paid in France can be offset against any tax due in England. Tax due in France, however, must be paid (article 6 of the said treaty).

In France, the taxation on the net value of the French estate would be as follows:

From €	To €	rate
0	7,699	5%
7,699	11,548	10%
11,548	15,195	15%
15,195	526,760	20%
526,760	861,050	30%
861,050	1,722,100	35%
above	1,722,100	40%

The role of the French notaireThe French notaire will draw up the deeds required to settle the estate in France, request any inheritance tax due and pay this on behalf of the heirs after having received all the necessary documents:

1) the title deeds for the property;

2) the current value of the property;

3) a copy of the deceased’s death certificate;

4) a copy of the deceased’s birth certificate;

5) copies of the deceased’s marriage certificate;

6) copies of the heirs’ birth, marriage certificates and passports;

7) a copy of the grant of probate if one has been issued (together with its translation as detailed above);

8) a copy of the deceased’s will together with its translation.

• For inheritance between spouses and civil partners (having signed French ‘PActe Civil de Solidarité’) – No tax is due.
• For inheritance by parents or descendants (with an exemption of €151.950 per child or parent):

Laurent Delanoë is a French bilingual notaire and a specialist in tax and international law