UK adoption law hinders inheritanc

BRITONS living in France can use adoption as a method of recognising stepchildren in a will, a common practice in France.

French law does not recognise any relationship between a spouse and children of their spouse's previous relationships.

If the deceased lived in France at the time of their death it is French law that determines who the heirs are and what inheritance tax has to be paid.

Thus, under French law stepchildren must pay the inheritance tax due for strangers, 60%, if they are left legacies from a will.

Laurent Cozic, a partner in the Groupe Monassier, Dinard said that in France it is common to solve this problem by adopting stepchildren in order to create a legal bond.

Once the adoption has taken place various benefits come into play - the usual tax allowances (€151,950 for descendants), sliding scale (about 20% rate up to €520,000) and applicable deductions (for example in the case of lifetime gifts).

For this to work, first of all it has to be possible to adopt the child. In private international law adoption is governed by the national law of the person wishing to adopt - so their nationality is key.

British law limits adoption to minors, so if the person you hoped to adopt is older than that, it is not possible.

In that case the only mechanism which can help is life assurance. If the contract is taken out and the premiums paid before age 70, the designated beneficiary will be taxed at a set rate of 20% after an allowance of €152,000.

If the sums are paid after the age of 70 an allowance of €30,500 will be applied and then the normal taxation rate of 60%. It is necessary that the premiums are not too high if the policy holder has their own children (due to the rules banning disinheriting your children) - ie. They must not be above the amount which the giver is free to dispose of as they wish.

It is therefore important to think ahead when you hope to leave money to your spouse's children and take action as soon as possible.

An English-speaking notaire (you can find details of these at www.notaires.fr) will be able to advise you considering your personal circumstances.

Where a person wanting to adopt is French, the application is made to the nearest Tribunal de Grande Instance and adults can be adopted if they consent.

French law allows for a person to be adopted even if they have another living parent of the same sex - in this case it is called an adoption simple (and the child has, for example, a biological father and an adoptive one) which is contrasted with adoption plénière (full adoption).