The French Laws Of Inheritance–Making Them Work For You

The French Laws of Inheritance–Making Them Work For You

PARLER PARIS: PARIS PROPERTY INSIDER

Enhanced web-edition online at:
/parlerparis/property

August 30, 2002

AN AMERICAN IN PARIS’ GUIDE TO FRENCH INHERITANCE LAWS

Dear Paris Property Insider Reader,

French inheritance law has very clear rules about what
happens to your French real estate after you die,
regardless of what you might want. Children and blood
relatives have certain mandated rights to your property
over spouses or partners.

The good news, however, is that there are ways–perfectly
legal–for you to leave that Paris apartment to anyone you
want. I’ll get to that in a moment. First, I want to go
over the basics, just so we’re all on the same page. French
Inheritance Law 101, if you will.

There are two types of joint ownership in France: "en
indivision" (tenancy in common); and "en tontine" (similar
to joint tenancy). There are important differences between
the two concerning how the property will be treated upon
the death of one of the owners.

"En indivision" is the default type of ownership in France,
where each person owns 50% of the property. When one person
dies, the property is divided according to French
succession law. Children or parents will have rights over
and above those of the surviving spouse to that 50% (see
last week’s Paris Property Insider article for more on
this:
/parlerparis/property/inheritance.html).

Joint Tenancy, "en tontine", does not establish ownership
until the death of one of the owners. At that time the
survivor is deemed to have owned the entire property from
the beginning and can dispose of the property as he or she
wishes. "En tontine" must be established at the time of
purchase; ownership cannot be converted to this after
purchase.

Although foreigners generally use "en tontine" when they
buy property in France, it is rarely used by the French. In
fact, you may need to insist that the notaire insert a
clause establishing this type of ownership in the title
when you buy. Though perfectly legal, it may be seen as a
bit of a fraud against your children.

The "en tontine" type of ownership, while solving some
problems, may create others. Should you want to sell the
property while both parties are still alive, for example,
this will require the agreement of both parties. One party
cannot force the sale if the other does not want to sell.
Likewise, in a divorce or other dispute, since there is no
clear owner, a court will have difficulty dividing the
property. Again, a sale could only be ordered if both
parties agree.

There is a third option, though, that allows you to dispose
of your French property as you wish–buying through a
"société civile immobilière" or SCI. This is a French
company (that you set up) that buys and owns the property.
You own shares in the SCI. You can then dispose of your
interests in the SCI in accordance with the law where you
are domiciled. In the case of a couple–married or not–you
would set the company up so that on the death of one owner
(share holder) the survivor receives full ownership of the
company, and therefore, the property.

It is also possible to set up a U.S. based company to do
the same thing. This is what International Living did when
it purchased the rue Mazarine apartment here in Paris. The
apartment is owned by Left Bank Properties, LLC. Though
this was not done to address inheritance issues, it
accomplishes the same result as an SCI. It is the company
and not the property per se that changes hands through sale
or death, thus circumventing the inheritance laws.

Each option discussed above comes with advantages and
disadvantages. While they address ways you can work with
French law to achieve what you want, the advantages and
disadvantages may depend on your particular situation. Only
a professional can advise you on the best way to take
ownership of your property in France.

When considering estate issues and taxes, you should always
consult with a legal professional who can advise you on the
particulars of your situation. We encourage you to seek the
necessary counsel to enable you to deal effectively with
these two important aspects of buying property in France.

If you’d like to discuss further anything covered in this
issue of Paris Property Insider, please e-mail me at
[email protected]

A bientôt,

Schuyler Hoffman
Editor, Paris Property Insider
E-mail: [email protected]

P.S. For information and details of the various services we
offer you on every aspect of buying or renting in Paris,
click here:
/parlerparis/property/consultationservices.htm
l

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