COMPASS IMMOBILIER: French inheritance law part 3

LEAVING PROPERTY TO A CHARITY

This is a possibility for certain individuals who are not subject to the protected minimum interests outlined above. Any charity should be carefully chosen, however, as it should be registered and recognised as a charity in France to avoid adverse inheritance tax implications.

USE OF TRUSTS

The trust, familiar to many of us from Anglo-Saxon legal systems, is an alien concept in France. If one is considering using a trust in respect of French property, specialist advice should be sought because they can lead to the settlor’s wishes not being respected and adverse taxation outcomes. Given that a trust is not recognised in France as being a legal ‘person’, it is not possible to purchase a property in the name of trust.

COMPANIES

The purchase of real estate in France through a company, particularly the French property holding company known as an SCI (société civile immobilière), has been very fashionable in the past and can be suggested as a vehicle for minimising taxation and avoiding certain rules of French inheritance law.
They can be suitable for people in particular situations: for example unrelated people purchasing property together who wish for greater flexibility for future alterations to the title and a more business-like arrangement; or for those who wish to disinherit a child and who are definitely not intending to become French resident. Unmarried or same sex couples may also find them useful, particularly to retain control of the property and possibly minimise inheritance tax.

They may not, however, prove to be advisable in a certain number of cases where a better result may be achieved via other arrangements. The type of company used should be given careful consideration as there are a variety of taxation and practical issues involved.

Using a company for property ownership evidently increases the costs and administrative burden.

Copyright All Rights Reserved Victoria Headdon, Compass Immobilier