Achieving inheritance equality for stepchildren in France

Sophie Hearle of Ashtons Legal answers a reader query on French inheritance and step-children's rights

16 June 2021

'Due to the French inheritance tax regime, the four children will not all have the same tax treatment' Pic: Rawpixel.com / Shutterstock

By Sophie Hearle

Reader question: How can I see that my stepchildren are treated the same as my own children for inheritance? I live in France and am married with two children from my first marriage and two stepchildren. 

Assuming you and your wife are both British nationals, you can elect for English law to apply to your estates.

This should provide more freedom in terms of how you can leave your assets (a proposed French law reform could affect this but is unlikely to happen). It should enable you to leave your assets entirely to the survivor upon the first death, then equally between all children upon the second death.

Due to the French inheritance tax regime, the four children will not all have the same tax treatment.

Children of the surviving spouse would be entitled to a tax-free allowance of €100,000, with anything inherited above this amount taxed on a scale between 5% and 45%. The surviving spouse’s stepchildren would have a tax-free allowance of €1,594. Anything more would be taxed at 60%. There are various options which can mitigate the tax burden for stepchildren.

One option would be to leave a share of your assets to the stepchildren via an assurance-vie. Where funds are paid in before the policyholder’s 70th birthday, French inheritance tax is only payable if a beneficiary receives more than €152,500. Where the amount received exceeds €152,500, tax is payable on the excess at 20%.

You would need to take investment advice from a financial adviser to see if an assurance-vie is suitable in your circumstances.

Another option would be to leave the surviving spouse an usufruit over your share of the assets. Your children would inherit your share of the assets upon the surviving spouse’s death.

While there might be inheritance tax to pay at the time of your death, it would be as between parent and child. The surviving spouse would leave their share of the assets to their children.

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