Is French tontine arrangement affected by inheritance law changes?

Reader Question: When we bought our property in 2014, we had a tontine clause put into the contract so that on the death of one partner, the survivor would inherit the house. Does that still stand, given the 2021 changes to French inheritance law?

The law change relates to estates where a non-French national elects the law of their nationality in order to disinherit children – for example, an English national electing English law and leaving their estate to their spouse, friend or partner instead of children.

French law would not have permitted this but, as of 2015, the EU Succession Regulation did.

The 2021 change seeks to prevent this where children are disinherited.

It is contentious, and perhaps will eventually be overturned.

Read more: EU decision on France’s inheritance law pushed back to February

Tontine not affected by the changes

The tontine arrangement is not an election of foreign law and, as such, is not affected by the 2021 change.

However, the tontine can only apply to certain specific assets, such as immovable property, where the conditions of ownership can be defined and registered by a notaire.

It cannot be applied to an entire estate, and you are advised to draw up a carefully prepared will to deal with your overall estate.

It is also worth noting that inheritance tax is assessed when a tontine passes ownership to the surviving tontine partner, as it would for a transfer under a will.

If it passes to a surviving spouse or pacs partner, it is exempt from inheritance tax.

If it passes to an unmarried, non-pacs partner, it is taxed at 60%.

Notaire fees and registration taxes (similar to stamp duty) still apply to register the new title deed and inheritance.

These can be significant, even where there is no inheritance tax.

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