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In France, a married couple is considered to be married under one of a number of different ‘regimes’. For a British couple who married in Great Britain and whose first marital home was in Britain, this will be séparation de biens. This regime means that each spouse holds their own share of the assets and so when one spouse dies their share will pass according to French succession law rather than reverting in its entirety to the survivor.
For a British couple owning property in France this may therefore mean that the surviving spouse would share ownership with any children, who are entitled to take a fixed share in the estate of each parent as protected heirs or héritiers réservataires. Although this generally seems to be of little concern to the French, sharing ownership with children has various disadvantages which may be an issue for British buyers. The surviving spouse would not be free to sell the property without the children’s consent and, in the event of a sale, would not be able to retain all the proceeds as these would have to be shared with the children.
In the case of a British couple who have moved permanently to France, their moveable assets such as bank accounts (whether in France or elsewhere) may also be covered by French succession law, meaning that fewer funds are available to the surviving spouse.
Immoveable property (land and buildings) always passes according to the law of the country where it is situated, so any property retained in Britain will pass in accordance with British law. The rights of the surviving spouse can be increased by making a French will but it is not possible to circumvent children’s rights completely by a will alone. Changes to French law in recent years have increased the rights of married couples and there is no longer any inheritance tax payable between spouses – a change many thought was long overdue – but French succession law does still tend primarily to favour the bloodline. Some British couples choose to defer the rights of their children to inherit by carrying out a change of matrimonial regime and adopting the communauté universelle de biens with an attribution clause to the surviving spouse. This is a deed which must be carried out in front of a notaire and which puts assets into ‘community’ property, allowing the survivor to take ownership of the assets on the first death.
Previous relationship
The change of regime is not usually an option where there are children from a previous relationship as it could mean effectively disinheriting those children. For example, if Mr and Mrs Smith each have two children from previous relationships and Mr Smith is the first to die, his children will not have an automatic right to inherit from Mrs Smith on her death. Even if Mrs Smith makes provision in her French will to leave a share to her stepchildren, her children will first have to take their reserved portion (in this case two-thirds between them), leaving only the remainder for the stepchildren. Furthermore, stepchildren have to pay 60 per cent inheritance tax above a very small tax-free allowance on anything they inherit from a step-parent. For this reason, we often find that notaires are reluctant to carry out a change of matrimonial regime where there are children from previous relationships as the regime is subject to challenge from those children. The change of matrimonial regime does have the disadvantage that any children will only have the opportunity to inherit from their parents once and will therefore only benefit once from their tax-free allowance rather than this applying to the estate of each parent.
Careful thought needs to be given to determine your priorities: either to protect the surviving spouse, or to allow the children to inherit as much as possible tax-free. The typical cost of a change of matrimonial regime is around €500 to €1,000 (£393 to £786) although this varies considerably between notaires. Some readers may be tempted to ask why this is worth paying when they could ensure that a surviving spouse gets the whole property by using a tontine clause, which costs nothing. The tontine does however have a number of disadvantages which the change of matrimonial regime does not. Firstly it can only cover one particular property and not any moveable assets. It must be inserted at the time of purchase and cannot be added retrospectively. Moreover the tontine can only be severed by mutual accord, meaning that in the event of a dispute or the mental incapacity of either party, the courts cannot intervene to force a sale of the property.
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