Does a UK will allow children to avoid French inheritance tax?

Reader Question: We recently gave up French residency and returned to the UK however we still have our house in the Ardèche.

Our wills were written in England years ago and at the time we were told that our house in France did not need to be mentioned.

The reader continues, “We have seven children who live in various countries; the UK, France, Australia and New Zealand.

“We are now concerned that they might be hit with taxes none of them could afford. If we add the house to our UK will, would it come under UK law? We originally paid around £20,000 for it and later another £5,000 for some extra land.”

First, we suggest you take advice from an expert, such as a UK solicitor with knowledge of both French and UK law, to make sure your wishes are as clear as possible with regard to your wills and your French house.

There are several options, including dealing with your whole estate in one English will or having an English will for UK assets and a French will for the French property.

With regard to which country’s inheritance law would apply to the French property, if you are resident in England at the time of your death, then the standard rule is that UK inheritance law applies.

This offers more flexibility as regards how you leave your estate, as opposed to French inheritance law, which sets minimum portions for each child.

Read more: How does France’s recent inheritance law affecting foreign wills work?

However, this does not affect the issue of inheritance tax, which is separate from inheritance law.

We assume the property has increased in value compared to what you paid for it.

€100,000 tax-free allowance covers most children

Even so, there is little risk that any French inheritance tax will actually be due, as under French inheritance law there is a €100,000 allowance per child in the case of inheriting from a parent before any tax is due.

Therefore, if your wish is that it should be shared between your seven children, there is no risk any of them will have to pay French inheritance tax.

Note, however, that the allowance is much lower if leaving property to stepchildren, so take advice on that aspect, if relevant.

As a UK resident, your whole estate, including the French property, will also be assessable for UK inheritance tax.

In the event your children had to pay any French inheritance tax this could be offset against the UK tax.

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