Estate Planning in France: Protecting Your Family and International Wealth

For high-net-worth individuals living in France, estate planning is rarely limited to preparing a will.

International families may hold property, investments, pensions and business interests across several countries. Their beneficiaries may live in different jurisdictions, and family structures can include children from previous relationships, unmarried partners and financially dependent relatives.

French succession law, inheritance tax and international rules can all affect how wealth passes from one generation to the next. Without coordinated planning, the final outcome may be very different from what the individual intended.

Coordinated estate planning in France may bring together legal documents, investment structures, property ownership, lifetime gifting and liquidity planning as part of wider cross-border strategy.

Why Estate Planning in France Can Be Complex

International estate planning involves two separate but connected questions:

1. Who is legally entitled to inherit?
2. What tax will the beneficiaries need to pay?

These questions are not always answered by the same set of rules.

The law governing an estate may determine how assets are divided between a spouse, children and other beneficiaries. French tax rules may then determine whether inheritance tax is payable and at what rate.

Selecting the law of another country to govern your estate does not necessarily remove French inheritance tax. This distinction is particularly important for British, American and other expatriates who assume that a will written in their home country will resolve every aspect of their French estate.

French Succession Law and Reserved Heirs

France traditionally protects certain family members, particularly children, through the principle of réserve héréditaire.

Where French succession law applies, a proportion of the deceased’s estate may be reserved for their children. The freely disposable portion—the quotité disponible—can generally be left to a spouse, partner, charity or another chosen beneficiary.

The protected proportion depends on the number of children. This can restrict the amount that may be left elsewhere, even when a will states that the entire estate should pass to a surviving spouse.

For blended families, these rules can create additional challenges. An individual may wish to provide financial security for a second spouse while ultimately preserving assets for children from a previous relationship. Property ownership, marital arrangements, wills and investment beneficiary clauses may all need to be coordinated to achieve an appropriate balance.

The EU Succession Regulation

The EU Succession Regulation, commonly known as Brussels IV, provides a framework for international estates connected with participating European countries.

As a general principle, the law of the deceased’s habitual residence at death may govern the succession. However, an individual can generally elect in their will for the law of their nationality to apply instead.

For example, a British national living in France may be able to specify that the law of England and Wales, Scotland or Northern Ireland—as applicable to their nationality—should govern their succession. American citizens and those with more than one nationality may require further analysis to identify the appropriate law and any internal state-law considerations.

The regulation is intended to support a more unified approach, with one law governing the wider succession rather than different laws automatically applying to different categories of assets. Notaires de France provides an overview of the EU Succession Regulation.

The effect of a choice-of-law clause can depend on the individual’s family circumstances, property ownership and any existing wills in other jurisdictions, therefore it is important to seek specialist legal advice.

Choosing Another Law Does Not Remove French Tax

One of the most common cross-border estate-planning misunderstandings is that selecting the law of your nationality will also select that country’s inheritance-tax system.

It generally does not.

Succession law determines matters such as the identification of heirs and the division of assets. Taxation is dealt with separately under French domestic rules and any relevant estate or inheritance-tax treaty.

French inheritance tax may be relevant depending on:

• The residence of the deceased
• The residence of the beneficiary
• The location and nature of the assets
• The relationship between the deceased and beneficiary
• The length of time the beneficiary has lived in France
• Any applicable international treaty

Families with assets or beneficiaries in more than one country may face reporting obligations in multiple jurisdictions. Relief from double taxation may be available in some circumstances, but it should not be assumed.

How French Inheritance Tax Treats Beneficiaries

French inheritance tax is calculated separately for each beneficiary. The available allowance and applicable tax rate depend heavily on the beneficiary’s relationship to the deceased.

Under current rules, transfers between spouses and PACS partners on death are generally exempt from French inheritance tax. However, a PACS partner does not automatically inherit in the same way as a spouse and normally requires a valid will to receive estate assets. Service Public explains the position for PACS partners.

Children currently have a €100,000 inheritance-tax allowance from each parent, subject to the treatment of certain earlier gifts. Amounts above the allowance are generally taxed at progressive rates. Current allowances according to family relationship are set out by Service Public.

The position can be considerably less favourable for more distant relatives and unrelated beneficiaries. Unmarried partners who are neither married nor in a PACS are generally treated as unrelated for inheritance-tax purposes. They do not automatically inherit and may face tax at 60% after a limited allowance.

This makes formalising relationships and reviewing estate arrangements particularly important for unmarried couples.

Cross-Border Wills

High-net-worth expats may have one international will or separate wills for assets in different countries.

Multiple wills can sometimes simplify local estate administration, especially where property or business interests are held in several jurisdictions. However, poorly drafted documents can accidentally revoke one another or contain conflicting instructions.

A review of each may consider:

• Which assets and jurisdictions it covers
• Whether it includes an appropriate choice-of-law clause
• Whether it is recognised in the relevant countries
• Who will act as executor or estate representative
• Whether the chosen individuals can administer foreign assets
• How it interacts with beneficiary nominations
• Whether it reflects the individual’s current family circumstances

Wills are also commonly reviewed following marriage, divorce, relocation, the birth of a child, a major business transaction or a significant change in wealth.

Property Ownership and Matrimonial Regimes

The way French property is owned can materially affect what happens on death.

Ownership may be divided between spouses, held jointly or separated into usufruct and nue-propriété interests. The couple’s matrimonial property regime may determine which assets belong to each spouse before succession rules are applied.

A home purchased without considering the wider estate plan can create difficulties later. The method of ownership should be reviewed before completion wherever possible, alongside mortgage arrangements, inheritance objectives and the needs of children from previous relationships.

Restructuring ownership after purchase may be possible, but it can involve additional legal costs, taxes and administrative work.

Lifetime Gifting and Intergenerational Planning

Lifetime gifts can help families transfer wealth gradually, support younger generations and use available allowances over time.

French gift-tax treatment depends on the value transferred, the relationship between donor and recipient and the history of previous gifts. Certain allowances may renew after the relevant statutory period, while some family cash gifts may benefit from additional provisions when qualifying conditions are met.

Families might consider gifting cash or investments, transferring property interests, assisting with a home purchase or passing shares in a family business.

While tax considerations may form part of lifetime gifting decisions, the donor’s future capital and income needs, including healthcare, long-term care and unexpected expenses, may also need to be considered. A gift may also have consequences in another country, particularly for US citizens or where the donor, beneficiary or asset has an international connection.

Assurance Vie and Beneficiary Planning

Assurance vie can play an important role in French estate planning.

The policyholder can nominate one or more beneficiaries to receive the proceeds following their death. Subject to the relevant conditions, assurance vie benefits may pass outside the ordinary estate and receive specific French tax treatment.

The outcome can depend on:

• The policyholder’s age when contributions were made
• The date and value of the contributions
• The wording of the beneficiary clause
• The identity and residence of each beneficiary
• Whether premiums are considered excessive
• The policyholder’s international tax position

A standard beneficiary clause may not be appropriate for a blended or internationally dispersed family. It may therefore require a review alongside the will rather than treated as a separate exercise.

Planning for Estate Liquidity

A valuable estate can still create financial difficulties if most of the wealth is tied up in property, private companies or illiquid investments.

Beneficiaries may need cash to meet inheritance-tax liabilities, legal fees and ongoing property costs. Without sufficient liquidity, they could be forced to sell an asset quickly or under unfavourable market conditions.

Cash reserves, life assurance and suitable investment structures may help address estate liquidity needs. For business owners, succession agreements, company valuations and the future transfer of ownership or management may also form part of the wider planning process.

A Coordinated Cross-Border Estate Plan

Estate planning in France typically involve cooperation between financial advisers, tax specialists and notaires or lawyers in every relevant jurisdiction.

For high-net-worth families, the planning process may involve maintaining complete record of assets, liabilities, ownership structures, beneficiaries and legal documents. The plan may need to be reviewed regularly as wealth, family circumstances, residence and legislation evolve.

With 40 years of experience supporting international families manage their wealth, Blacktower can help you begin a coordinated conversation about your cross-border estate-planning priorities.

This article is for general information only and does not constitute financial, investment, tax or legal advice. Tax and succession treatment depends on individual circumstances and may change. Professional advice should be obtained in each relevant jurisdiction before taking action.