Reader question: I am British and live in France with my French Pacs partner. We have two children. I have rental flats in the UK and our French home is an SCI (99% me, 1% my Pacs partner). I have savings in both countries. My English will leaves everything to my partner and, if she does not survive me, to our children. My French will is quite standard and stipulates my partner be awarded the usufruit. Will my UK possessions follow UK inheritance laws, ie. go to my partner and be taxed in the UK, and my French possessions follow French laws and be taxed in France?
As a French resident, French inheritance law applies to your worldwide estate under the EU Succession Regulation known as Brussels IV. However, the UK did not sign up to this and will apply English law to your UK rental flats. When it comes to UK savings, the UK will apply the law of your country of domicile.
Forced heirship provisions under French law mean your children will be entitled to a proportion of your estate. Where a couple are married, the surviving spouse’s rights can be expanded by leaving them an usufruit interest over the assets. However, this is not available to Pacs partners and so the provisions of your French will may not be fully permissible.
As a British national, you may be able to elect for English law to be applied and leave French assets entirely to your partner. However, a recent French law introduced a right of compensation for the children of a deceased person who was resident in, or a national of, an EU country (or if any of the children were) where foreign inheritance laws do not contain any reserved rights for the children.
If you are domiciled in France under both French and English rules, then French inheritance tax will be charged on your worldwide estate (including UK assets). UK inheritance tax will also be charged on your UK rental properties, although it should be possible to claim a credit for the tax paid in the UK against the tax due in France.