One key reason to review your wealth management is to ensure it is up to date.
Establish whether any tax rules or financial regulations have changed, and consider if developments in your personal and family circumstances mean you should adjust previous arrangements.
However, an effective review of your financial planning, to ensure it is suitable for your life in France and your wishes for the future, needs to go beyond that.
Many people only consider segments of their finances at a time. They may have bought shares in companies they like and/or invested in funds recommended by a financial adviser years ago.
They may speak to a tax accountant to learn about French taxation and perhaps ask about tax planning opportunities. Then they speak to a lawyer about setting up a French will.
At some point they will look at their pension funds and try to work out how best to access their retirement savings.
For truly effective financial planning, however, you need to consider all these aspects together.
For example, how you hold your investments can make a difference to your French tax liabilities.
Estate planning in France is no simple matter, with its complex succession tax regime and forced heirship rules.
How you own assets can impact on what you can achieve. When deciding what to do with your pensions, look at all your savings and what income they can generate.
Here is a summary of three key areas you should consider in your financial plan review:
French residency and taxation
The fact that you are resident in France, rather than the UK, has a significant impact.
Make sure you know where you are resident for tax purposes, especially if you are new to France or spend time in both countries.
The French and UK tax residence rules can be more complex than first meets the eye. The double tax treaty determines where you pay tax if you are resident in one country and earn income in the other.
Regardless of how effective your tax planning in the UK was, you pretty much need to start afresh in France. What was tax-efficient across the Channel is unlikely to be tax efficient here.
Have you explored all the compliant arrangements that provide tax benefits in France? Assurance-vie, for example, can provide advantages that go beyond lowering your tax bill.
Being a French resident can offer tax advantages if you are in a position to safely take your entire pension as a lump sum.
While you are no longer eligible for the UK’s 25% tax-free lump sum, some people can limit taxation on the whole amount to just 7.5% (with a 10% allowance).
This may be possible if you have not started drawing benefits yet and you take the entire fund in one go.
Pension income and lump sums are also subject to annual French social charges of 9.1%, but not if you hold an S1 form or are not registered for French healthcare.
Estate planning
Do not leave estate planning to the final stage of financial planning.
The way you own property and investments in France makes a difference to how you can distribute your assets on death and how much tax your beneficiaries pay.
Take this into consideration when buying assets and setting up investment arrangements.
Succession law in France protects children over your spouse. This can have unwelcome consequences for families with children from previous marriages.
UK nationals can use EU regulation Brussels IV to distribute their estate under UK law but research this first as it may not be the best solution for you.
Financial structuring for life in France
The key rule for financial planning is that it must be structured around your personal circumstances – your lifestyle today and plans for the future, family situation, income requirements, objectives, time horizon and risk tolerance.
If you do not already have a strategic financial plan in place for France, you may need to take a fresh look at all your savings and investments and consider if they are suitable for you today. Are they too risky?
Do you have adequate diversification?
Can they provide income without risking the capital?
Could you consolidate shares and funds so they are easier to manage?
At the same time, consider your tax liabilities on investment income and gains and whether you could use alternative tax-efficient arrangements to hold your investments.
How will these savings be passed to your heirs? What inheritance taxes will they have to pay? Can the funds be passed on directly or will there be a lengthy probate process?
Some assurance-vie policies allow you to hold your choice of investment assets, while providing tax and estate planning benefits.
There are various ones available so choose the one that works for you.
Every family is different. Your strategic financial planning must be carefully designed for you. All the various aspects should work cohesively to create an overall wealth management plan that provides long-term financial security for yourself and achieves your wishes for your heirs.
For peace of mind that you have covered everything, that you have understood the intricacies of French taxation and not missed out on tax planning opportunities, and that making one financial decision will not have unexpected consequences on another, take expert, professional advice.
If you have assets and/or heirs in the UK, speak to a cross-border specialist.
They should take the time to get to know you to then outline personalised recommendations for you.
This article is byBill Blevinsof Blevins Franks financial advice group who also writes for the Sunday Times on overseas finance. He is co-author of the Blevins Franks Guide to Living in France (www.blevinsfranks.com).
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice
