I want my grandchildren to inherit, not my children
I am a widow with my own house and have made a will under English Law. I wish my grandchildren to inherit the house
Q: I am a widow with my own house and have made a will under English Law. I wish my grandchildren to inherit the house to give them a future as their parents’ mismanagement lost them their family home.
Must the grandchildren as minors still pay inheritance tax if the house stays in the family? (I have appointed two trustees.)
If so, at what rate and when would it be applied? V. S.
A: French inheritance tax applies (whether English or French law) giving a tax-free allowance of €100,000 from you to your child, on gifts or inheritance. There is a tax-free allowance of €31,865 from you to each grandchild for lifetime gifts, or €1,594 on inheritance (then sliding scale tax, from 5% to 45%).
In French law your child cannot be disinherited. If they die before you, or give up claim, their children can use the €100,000 relief.
A grandparent can make a trans-generational lifetime gift, with grandchildren and parent agreeing to share the parent’s gift allowance of €100,000.
From August 2015 an English national can elect English law, and leave the whole estate to the grandchildren. However, tax law has not caught up.
It will likely be the case that the grandchildren can use only their €1,594 allowance (each). The €100,000 allowance will be unused.
Appointing trustees to deal with French assets should be treated with caution as it could be very problematic and costly.
A minor can directly inherit property but would need a parent, legal representative or third-party administrator to accept the inheritance on their behalf (but preferably not as a trustee).
Any letting, sale, mortgaging etc of the assets would require representation for the minor. If the parents do not do it a juge des tutelles could be appointed – but as it is a court process this is not straightforward. Note, too, the minor may become entitled to the funds at 16.
Assurance vie may be interesting and an advisor can set an age limit for the grandchildren’s entitlement.#
Reader's query answered by Barbara Heslop of Heslop & Platt - Tel: +44 (0)113 393 1930 www.heslop-platt.co.uk contact@heslop-platt.co.uk
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