What will happen to our holiday home in France when we die?
John Kitching, a director of French Law Consultancy Limited, answers a reader query
Succession laws can be complicated when involving two nationalities
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Reader Question: My wife is French, I am British, we have three adult children and we all live in the UK. We have a holiday house in France but without a tontine. My wife has lived in the UK most of her adult life, but she does not have nor want a UK passport.
We hope to leave the house to each other, and then to the children, which our solicitor is helping us with for the UK estate. We think we can elect English law to do the same for the French house, but my solicitor is not sure.
Your solicitor is right to be cautious as the UK and France have different laws for inheritance and assessing inheritance tax.
As there is no tontine clause in the title deed, the French house does not pass automatically to the survivor. It falls into your estates to pass under your will (or by intestacy).
Under the EU Succession Regulation, France allows a person to elect the law of their nationality to apply to their estate.
As you are English, you can apply English law and freely leave your French estate to your spouse. However, as your wife is French, she cannot elect English law.
As her permanent residence is in England, you may logically consider English law applies, which it does. However, where there are foreign immovable assets then Private International law applies, under which English law refers to the law of France for the French immovable assets.
French law therefore applies for your wife’s share of the property.
This allows the spouse the choice of a life interest (and bare ownership to children); one quarter of the estate (and three quarters to children); or a combination of the two (one quarter in full ownership and three quarters as life interest).
You could ask a notaire to draft a change of marriage regime to adopt the Communauté Universelle regime. This makes the property (and all global assets) an asset of the marriage. It therefore passes to the surviving marriage partner, and only to the children on the second death, but it would incur significant costs.
I recommend you have UK wills as the UK does not understand marriage regimes, and also French wills so it is clear who inherits the French estate on the second death.
Seek expert professional advice to fully understand your options, especially as the children would only benefit from their tax-free allowance of €100,000 each on the second death if you leave all to your spouse.
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