French marriage regimes
Make sense of French marriage regimes
IF YOU are married and live in France your assets and liabilities will be subject to a set of rules, known as a matrimonial regime. This applies regardless of whether you were married here or abroad. Connexion explains some of the main points relating to this.
From a French standpoint, these rules will always apply if the marriage is celebrated in France or if the first matrimonial home after a marriage abroad is in France.
If the marriage is to be celebrated in France, it is advisable to consult a notaire beforehand so they can invite you to consider options ranging from common ownership of everything- to each person retaining all of the property they brought into the marriage and that bought or given to them during the marriage.
English law does not recognise marriage contracts. A couple married in Britain but now living in France will be treated as falling under the second example above, known as séparation de biens, unless a decision is taken to change this.
A change is possible as long as the couple has been married for two years and/or has not previously changed the regime in the last two years.
The default position for a French marriage, however, where no other choice is made, is communauté réduite aux acquêts, meaning property acquired since the marriage (excluding inherited property) is jointly owned.
These regimes affect how property is owned within the marriage (including homes, money in bank accounts, businesses etc) and what happens in the case of divorce or on death as well as the liability for business debts.
It is important to bear their effects in mind when buying a home.
There are several different regimes and it is also possible to “tailor- make” the actual marriage contract with tweaking for specific items of property.
What are the French marriage regimes?
There are two main ones:
1: Séparation de biens.
Here all property owned at the time of the marriage and bought during it remains owned by the person who paid for it or was given or bequeathed it and only the individual’s possessions are at risk if he or she is in debt.
Due to the latter factor this arrangement may suit, for example, couples where one spouse is self-employed and does not wish the other spouse to be at risk for business debts.
Where property is not clearly owned by one or the other partner, it is deemed to be owned half and half if it has been acquired by means of income accruing during the marriage. This may apply to the matrimonial home if the deeds state it is jointly owned but do not specify precise portions of the purchase price to be paid by one or other of the spouses.
In the case of death the surviving spouse has only the usual legal rights, eg. as a minimum to go on living in the family home if in the name of the deceased spouse. Whether he or she also has full or partial ownership depends on whether he or she already owned a share, the contents of the deceased’s will and whether or not the deceased had children (in which case they would be entitled to part of the estate). In a divorce each party gets property which belonged to him or her.
It is however possible to acquire small elements in shared ownership, such as a car or items of furniture.
2: Communauté universelle
Here all assets acquired after marriage are owned in common apart from certain personal items like clothing or certain kinds of income such as compensation payments received as damages for personal loss. Assets belonging to either spouse before marriage may be brought into common ownership when this contract is entered into, or excluded according to the couples’ choice. All matrimonial property is potentially at risk for joint or individual debt arising after marriage.
This regime can be helpful to ensure all of the marital property, eg. homes, goes in full to the surviving spouse after the first death, notwithstanding French rules of forced inheritance.
In the case of divorce, property would be shared half and half.
Honorary avocat Gerard Barron of Boulogne-sur-Mer said: “Couples owning holiday homes in France but who remain UK resident may also adopt eg: communuauté universelle restricted to their French property, and often do when they realize they ought to have adopted a tontine clause on purchase but did not receive appropriate advice at the time.”
What other options are there?
As mentioned, the default arrangement in a French marriage is communauté réduite aux acquêts. This is equivalent to communauté universelle for purchases made during the marriage and for most forms of income but each spouse remains sole owner of property they brought into the marriage and of gifts and inheritances received during it. In the case of divorce or death the property held in common is split half and half.
Communauté réduite aux meubles et acquêts is similar. All money and other property is placed in common ownership except real estate owned before the marriage.
Modified versions of these last two are possible, with clauses stating, for example, that a surviving spouse may inherit all the jointly-held property or that the spouses will have unequal shares in the marital property, rather than half and half ownership.
Finally, participation aux acquêts is similar to séparation des biens, but if the marriage ends then the spouse who has acquired less property during the marriage is
eligible for compensation amounting to half the difference between his or her possessions accrued during the marriage and those of the other spouse.
How can a communauté regime help with planning inheritance matters?
It may be one way of ensuring that ownership of the family home (or of everything, in the case of communauté universelle) goes to a surviving spouse and there is not a situation of joint ownership with children, who otherwise have an automatic right to inherit a portion of the deceased’s estate under French law (one half for a single child, a third each for two or three-quarters shared by three or more).
Note however that the new EU regulation on inheritance will also allow more freedom in terms of bequests with effect from August 17, 2015 as Europeans resident in France will be able to opt for the inheritance law of their country of nationality (eg: England or Scotland) to apply to their whole estate.
This benefit does not however come into play automatically; the default rule is that only half of the property goes to the survivor.
For property to go to the survivor in full you need to include a specific clause in the contract specifying this, which may relate to certain specified property or all of it. Children of the marriage only inherit after the death of the second spouse (and will only benefit once from the children’s €100,000 tax allowance).
Such an arrangement could however be challenged through the courts on death if there are children from the deceased’s previous relationships who would otherwise lose out later (ie. because on the death of the second spouse those children may receive nothing from his or her estate as there is no blood relationship). If this is a concern you may wish to take specific legal advice.
How do you change your existing matrimonial regime?
You must visit a notaire, who will discuss the best regime and contract clauses and draw up and register the appropriate contract.
The notaire is required to obtain the agreement of adult children to the proposed change and creditors are informed by publication in a newspaper.
If one or other of the spouses has children who are minors, the new contract must also be approved by the family division of the tribunal de grande instance.
If the parties are not yet married, they should consult a notaire beforehand.
The cost involves various administrative charges plus the notaire’s own fees and varies greatly depending on the couple’s circumstances and the values of property involved. If it is necessary to go to the family judge, you will also need an avocat, whose fees for this are typically around €1,000 or more.
What would happen if we change regime and move back to the UK?
The effect will be fairly limited. In terms of inheritance, French law – including the marriage contract - would still apply to any property situated in France, but would not apply to UK-based property.
As for divorce, if the divorce is started in England, then English law as to fair division of the assets will apply and the English courts will not see themselves as bound by the matrimonial contract.