Estate planning is essential in the pursuit of protecting your family’s future and achieving your own peace of mind. But how do you go about effective estate planning whilst living abroad? How does foreign law affect you? What happens to your UK savings and investments? Where does your pension stand? And what about your property?
Careful estate planning is a necessity. Your hard earned money, assets and property portfolio are all at stake if you don’t go about it correctly.
Succession laws apply to worldwide assets held by anyone living in France. They lay out the laws which must be abided to when the estate owner dies. Succession laws largely incorporate regulations on taxation, which is often rather complex.
Tax under Succession Law
Tax liabilities are placed solely on the beneficiary and are payable on the entire estate of the deceased. With that said, however, succession law does act to protect children from being disenfranchised from their inheritance. The Napoleonic code sees children as ‘protected heirs’ and means they may inherit up to 75% of the estate. This, once again, can be complicated. Stepchildren are subject to different laws and may receive a significantly lower net inheritance.
Further, surviving spouses are not legally seen as a ‘protected heir’. This means that effective estate planning can be very difficult. Many expats are using an Assurance Vie as a solution, however, we would recommend seeking advice on the best option for you.
As mentioned above the solution to some taxation on inheritance is an Assurance Vie. You can read everything you need to know about it in a previous blog.
A further solution, introduced in 2015, is the Brussels IV regulation. The regulation allows for an expatriate to elect for the succession law of their home country to be applied instead of their country of residence. This must be stated in your will, if it is not, French law will apply.
The Brussels IV regulation has, however, been critiqued. The regulation is reasonably new and untested. It may not be as beneficial as you think. It is law that a French notary must handle your estate, which would mean that they are dealing with laws they are unfamiliar with. This could cause various complications. Additionally, if your residency is France but you use the succession laws of your home country, your beneficiaries may find themselves paying inheritance tax for both locations.
Here at Harrison Brook, we are committed to making your life as an expat enjoyable and stress-free. Get in touch today for any financial needs, from pension transfers to savings and investments.