Looking into Assurance Vie Inheritance for Non-Relatives? If you are a UK expat living in France and wish to pass on your assets to a non-relative – such as a partner, godchild, stepchild or close friend – you may be surprised at how restrictive French inheritance law can be. Fortunately, the Assurance Vie (life assurance) offers a flexible and tax-efficient solution to bypass forced heirship and protect your chosen beneficiaries.

Understanding Inheritance Law in France

France has one of the most rigid systems of succession law in Europe. Known as forced heirship, it requires that a portion of your estate must go to your children, whether you want that or not; these children are considered ‘protected heirs’ under French law. French succession law governs how inheritance is distributed, ensuring that protected heirs receive their legal share. If you die without a will or valid estate planning, non-relatives – including unmarried partners – could receive nothing and even face up to 60 percent inheritance tax. This system is highly rigid, and recent changes in French legislation can also impact inheritance outcomes. The choice of marriage regime can also impact how assets are distributed and taxed under French law.

The basic rule is that residents in France are considered domiciled there for inheritance tax purposes, which means their worldwide estate is subject to French inheritance tax. French authorities charge succession taxes on the deceased’s total estate, which includes both French and foreign assets, in accordance with French inheritance law and relevant tax treaties. The deceased’s total estate, including both French and foreign assets, is subject to French inheritance tax rules. These succession taxes can be significant for non-relatives.

So, how can you pass on wealth to someone who is not legally recognised as family?

Why Assurance Vie Is Essential for Non-Relatives

Assurance Vie is a uniquely French financial product that acts like a combination of a savings wrapper and inheritance planning tool. As a savings wrapper, it offers a wide range of investment opportunities and capital investment options, such as mutual funds, stocks, and structured products. Assurance Vie policies can be tailored to meet individual financial objectives by adjusting investment allocations and aligning investment choices with personal goals and risk tolerance. Assurance vie policies are also highly flexible, making them particularly useful for cross-border inheritance planning. It allows you to name any beneficiary, including those not legally recognised under French law – and pass on wealth with favourable tax treatment, tax benefits, and inheritance tax benefits.

Unlike assets that fall under French succession rules, funds in an Assurance Vie sit outside of the estate for inheritance purposes. Assurance Vie can be used to shelter financial assets from inheritance tax, providing significant advantages for beneficiaries. These tax benefits are possible because Assurance Vie leverages French tax laws to facilitate efficient wealth transfer.

• Personal tax efficiencies: Assurance Vie can help optimize tax outcomes for beneficiaries, offering tax-deferred growth and other advantages.

Assurance Vie is considered a worthwhile investment for those seeking to optimize inheritance outcomes for non-relatives.

Key advantages:

• Freedom to choose your beneficiaries, regardless of blood relation
• Tax exemptions of up to €152,500 per beneficiary if contributions are made before age 70
• Avoidance of forced heirship, providing more control over your legacy
• Deferred income tax on investment gains until withdrawal

This makes it a powerful tool if you want to support a partner, stepchild, or friend, especially if you are not married or in a PACS (civil partnership).

How Much Can You Inherit Without Paying Tax?

In France, the allowance for non-relatives is only €1,594, after which they face a flat 60 percent tax. This amount is known as the ‘inheritance allowance’ under French law, and any sums above this threshold require beneficiaries to pay tax at the applicable rate. Under French inheritance tax rules, non-relatives do not benefit from the same allowance as close family members, making planning essential to avoid high french inheritance taxes. French residents may also benefit from an annual income tax allowance, which can help reduce taxable income from Assurance Vie policies, especially for those over 70. In contrast, with an Assurance Vie:

• Each named non-relative can receive up to €152,500 tax-free, if the policyholder is under 70 when the capital is invested. Beneficiaries can also use their own inheritance allowances strategically to further reduce tax exposure, compared to the same allowance available to spouses or direct descendants.
• Beyond this, tax rates are significantly lower than the standard inheritance scale.

This makes the Assurance Vie particularly advantageous for expats who are not relying solely on family structures for estate planning. The sums paid to beneficiaries from Assurance Vie are generally excluded from the taxable estate, unless no beneficiary is designated, which can help reduce potential inheritance tax liability. Without proper planning, beneficiaries could face substantial potential tax bills, so it is important to mention potential tax bills that may arise and to plan accordingly. French inheritance tax rules for non-relatives are especially strict, and french inheritance taxes can have a significant impact on estate planning if not managed proactively. The optimal use of allowances and tax planning strategies may depend on particular circumstances, such as residency status, age, and the structure of the estate.

Can Foreigners Use Assurance Vie?

Yes. Foreigners and non-residents can open an Assurance Vie in France. However, residency and tax implications can vary, so it is important to structure the contract correctly. For a French resident, Assurance Vie offers significant tax advantages and is a popular estate planning tool. French residents benefit from specific inheritance tax rules and favorable treatment for long-term savings. It is also crucial to determine if you are considered a French resident person for tax purposes, as this status affects your inheritance and tax liabilities. As a UK expat living in France, you should consider:

• Whether UK inheritance tax (IHT) applies to your worldwide estate
• The impact of your home country on inheritance taxation, as your country of origin may have different rules or treaties with France
• If your Assurance Vie will fall under French or UK tax rules
• The risk of double taxation and how double taxation treaties between France and your home country can help mitigate this issue
• The importance of DTT covering inheritance, which specify which country has the right to tax your estate
• How countries covering inheritance may have different cross-border rules, making it essential to understand the relevant regulations
• The effect of EU Succession Regulations and the European Succession Regulation (Regulation No. 650/2012) on which inheritance law applies, especially for expats with assets in multiple EU countries. Owning French property can have specific inheritance and tax implications, so it is important to coordinate your estate planning accordingly.
• How your beneficiaries are taxed in their country of residence
• How property assets, both in France and abroad, are treated for inheritance and tax purposes, as different jurisdictions may have varying rules and tax rates.

We recommend speaking with a cross-border financial adviser to ensure the right setup for your unique situation, and to seek professional advice for complex cross-border inheritance planning.

Choosing Your Beneficiaries

With Assurance Vie, you can name anyone as a beneficiary – including:

• Unmarried partners
• Stepchildren
• Godchildren
• Friends
• Charities
• Other beneficiaries (such as non-relatives or individuals outside your immediate family)

You can also include family members, such as children, spouses, and other close relatives, whose treatment under French succession law may differ from non-relatives.

You can also specify percentages, multiple beneficiaries, and conditions of payment. This offers a high degree of control that traditional French wills do not provide. It is important to clearly express your inheritance wishes to ensure your intentions are honored and effectively implemented.

A surviving spouse can be specifically protected through Assurance Vie, ensuring their inheritance rights are secured even in complex family situations.

Make sure your beneficiary clause is clearly worded. Ambiguity can cause delays or disputes.

To ensure your beneficiary designations align with your overall estate plan and inheritance wishes, it is advisable to discuss succession planning with a professional.

How to Avoid Inheritance Tax in France Using Assurance Vie

Here is a simple breakdown of how expats can minimise or avoid inheritance tax in France with Assurance Vie:

Age of Depositor	Tax-Free Allowance per Beneficiary	Tax Rate on Excess
Under 70	€152,500	20–31.25%
Over 70	€30,500 (shared across all)	Standard scale

The tax-free allowance depends on the premiums paid into the Assurance Vie policy before and after age 70, with higher allowances for premiums paid before age 70 and a lower shared allowance for premiums paid after 70.

Assurance Vie allows you to invest in a range of financial assets, including mutual funds, which can be tailored to your investment goals and play a key role in inheritance planning. As your investments grow, any gains whilst funds remain inside the Assurance Vie policy are tax-deferred, allowing for tax-efficient growth over time.

It is important to conduct a regular financial planning review to ensure your arrangements remain optimal for inheritance tax mitigation and continue to align with your personal circumstances and current laws.

When planning your estate, the remaining capital invested in the Assurance Vie after allowances and taxes can benefit from favourable inheritance tax treatment, making it an effective tool for wealth transfer. Careful planning is essential to minimize tax liabilities and protect your beneficiaries. Succession planning should take into account both legal and tax considerations to ensure assets are transferred efficiently.

For families with three or more children, French succession law requires that three-quarters of the estate be divided among the children. This makes planning especially important for larger families to ensure fair distribution and tax efficiency. The remaining capital is then distributed to your chosen beneficiaries according to the policy terms.

Tips – Assurance Vie Inheritance for Non-Relatives:

• Open your Assurance Vie early and contribute regularly
• If over 70, keep the amount below €30,500 for non-relatives to reduce tax
• Consider multiple contracts for different beneficiaries

FAQ – Assurance Vie Inheritance for Non-Relatives

Can you inherit from a non-relative in France?

Yes, but without estate planning, non-relatives are subject to 60 percent tax on amounts over €1,594. Assurance Vie helps avoid this.

How much tax do you pay on inheritance in France?

Tax depends on your relationship to the deceased. Spouses and children benefit from high exemptions, while unrelated heirs face the highest rates. Assurance Vie offers a separate and more generous allowance.

Do I need a French will if I own property in France?

Not necessarily, but it can help. Combine a French will with tools like Assurance Vie for maximum clarity and control.

Is there inheritance between spouses?

Yes, spouses can inherit tax-free. However, default French rules may still limit your ability to pass on your full estate without planning.

Are gifts taxable in France?

Yes. Gifts are taxed similarly to inheritance unless structured through tax-efficient tools like Assurance Vie.

Conclusion

Whether you are supporting a partner, a stepchild, or someone outside your immediate family, Assurance Vie provides a reliable and tax-efficient path to securing their financial future. It sidesteps many of the pitfalls of French inheritance law, offering control, flexibility, and protection for your chosen heirs.

Take the Next Step

At Harrison Brook, we specialise in cross-border financial advice for British expats in France. If you want to structure your wealth in a way that reflects your wishes – and avoids unnecessary tax – we are here to help.

👉 Get your free financial review today and speak to one of our English-speaking advisers.