Inheritance - your questions answered

WE would like to thank the many readers who have sent in inheritance-related questions following Grégory Denoyelle’s December article and our questions and answers in January. The topic continues to attract a lot of interest. We will be publishing more questions and answers in the April edition.

My mother is a widow and lives in Normandy. We live close by. My two brothers and sister live in England. My sister has had no contact with her family for 14 years and has said she wants nothing to do with her mother's inheritance.
Shortly she will remarry and live abroad and I suspect we will lose all contact with her.
Can my mother can transfer my sister’s share of property to her other children?
CC

Laurent Cozic, a partner in the Groupe Monassier, Dinard (www.notaires-dinard.com) replies:

As we are talking about real estate in France, French inheritance laws apply. The law protects descendants by reserving a minimum portion of inheritance for them.

If there are four children the reserved portion is three-sixteenths per child. It is, however, possible to make a will or gift allocating specific property (such as a house) to the children with whom the mother is in contact, who would then be obliged to share out a monetary sum with the absent sister to the value of her entitlement under the inheritance laws.

This may simplify matters after the mother's death so that, for example, the other children are not left in a situation of common ownership of real estate with their sister.

It is also possible for the sister to renounce her part of the inheritance while your mother is still alive. This would require a deed (acte authentique) to be drawn up by a notaire, in France and for it to be the sister's wish that this be done. Known as a RAAR, this is irrevocable, and expresses the will of the person renouncing the inheritance.

If this person is not contactable or refuses to come to France to sign such a document, this option is not possible.

After the mother's death, should it be impossible to contact the sister, it will be necessary to arrange, through an avocat, for the inheritance to be shared out by a court among the other heirs. You need to discuss this with a notaire. The costs will vary according to the solution.

The January edition mentions that, for residents in France, French civil law governs inheritance of any real estate and of money held in bank accounts. Does that mean that other investments like shares and bonds are not included?
CL

Grégory Denoyelle, a notaire from Saint-Omer, Pas-de-Calais (gregory.denoyelle @notaires.fr) replies:

French Civil Law governs inheritance of any real estate located in France and of money held in any bank accounts. This also applies to any French or non-French investments such as shares and bonds.

My husband and I are no longer in contact with one of our children so we need to protect our assets and be able to sell them until we both die.
We jointly own a British company. Would it be possible for us to transfer the ownership of our French house from us as individuals to the company? If so what sort of fee would a notaire charge?
AR

Laurent Delanoë, a notaire from Salins-les-Thermes, Savoie (l.delanoe@notaires.fr or www.dsdnotaires.fr) replies:

If you decide to transfer the ownership of your French house from yourselves as individuals to the British company which you own jointly, beware of the capital gains tax liability of the said company at the time of the sale.

Besides the possible tax and legal advantages from an English point of view, the capital gains tax regime for foreign companies in France is very specific and disadvantageous.

The fee for undertaking this transfer would depend on the type of company.

I am a UK resident with a house in France worth e200,000. I am 74, divorced, with no children, and with no parents or siblings alive. I have six nephews and nieces, who it seems would be liable for 55% tax paid up front.
I read about a small allowance in euros but am not clear whether it is in total or for each recipient. Could setting up a société civile immobilière (SCI) help?
LL

Rémy Landreau, from the notarial office of Gérard Kaeufling in Saint-Priest, Rhône, replies:

The allowance you mention, between uncles and nephews, applies to each nephew.
Moreover you have no children and you can designate any person you want as your heir.

You are not obliged to designate all your nephews and could choose just one of them. Unfortunately, they would have to pay the 55% of tax.

Creating an SCI will not help because it does not change the level of inheritance tax and it would cost you a lot (setting up the company, capital gains to pay, accounting and legal aspects).

The best solution would be to give the house to all or only one of your nephews, reserving the usufruit for yourself (right to live in it).

When you give the house away while you are still alive, you benefit from a tax reduction of 10%.

When we purchased our home, our notaire recommended a tontine clause in our deeds to enable the surviving spouse to sell our big house and downsize or to return to the UK. Will it do so, as we were assured?
As we grow older we have considered moving into a retirement home or alternatively, selling our house using a “viager.”
FM

Francois Trémosa, a notaire with the Groupe Monassier in Toulouse replies:

You and your notaire were careful enough to structure your situation when you bought your estate in France: it is always more costly and complicated, to deal with the situation once the purchase has happened.

In your case, the surviving spouse will become the sole owner of the house, thanks to the "tontine" clause, and he/she will be able to sell your house (via a “viager” if desired) and downsize or return to the UK.

For the benefit of our readers, a "viager" is a sale contract whereby the owners agree to sell their home to a buyer and convert the totality or a portion of the selling price into periodic (eg monthly, quarterly) payments which must be made until the death of the seller's. Typically, the seller's remain living in the house until their death.