What are French SCI's benefits?

As a married couple, are there inheritance planning advantages to buying a home through an SCI property company? R.C.

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Whether or not a Société Civile Immobilière (SCI) has advantages depends on your marriage regime, ie. how assets are owned within a marriage.

If you were married in the UK and moved to France and have not changed your regime with a notaire, you will be under the séparation des biens regime, where each spouse owns their own assets outright.

On death, their assets go to their beneficiaries, who may then be liable for the tax. In this case in French succession law, their children are favoured and the spouse has reduced protection.

Réduite aux acquêts is the default for French marriages. Assets owned prior to marriage remain in the names of their owners, and assets acquired during it belong to the couple equally.

In communauté universelle, assets of both belong equally to the two and on death assets of the deceased are recouped by the survivor.

An SCI is a limited company to hold and manage property and is simpler to administer than an ordinary company. Associates are personally liable for its debts and may opt to set up for either corporate or personal taxation.

If tax planning is the aim, communauté universelle negates the idea of splitting shares in the SCI (and thus ownership) between the spouses, making it irrelevant.

Likewise, with réduite aux acquêts, if property is bought during the marriage the same applies. So the SCI is only helpful in séparation de biens. The assets of each spouse are separate, so it is possible for each to own half the shares in the SCI in their own names.

On the death of one spouse, SCI shares of the deceased can be split. For example, use of the deceased’s shares could be given to the spouse and residual ownership to the children.

This would enable the spouse, with the use of their own half-share of the SCI shares plus use of the deceased’s shares, to have the use in full.

Thus the spouse could retain control over the SCI and decide what to do with the home, a control which otherwise would have been lost. If inheriting only residual ownership, children obtain a discount in the shares’ value for tax.

Another matter is that several people inheriting an asset causes issues since a majority vote confirms decisions. With an SCI it is possible to nominate only one (or more) managers to take decisions.

The lack of majority votes does not hold up taking decisions, which facilitates managing the asset.

Another advantage is that each associate is only liable to the extent of their shareholding and not for debts of other associates, which would be the case where several people own an asset outside the structure of an SCI. See a professional on this topic