Is it possible to leave French second home to nephews and not spouse?
John Kitching, a director of French Law Consultancy Limited,
answers a reader query
Get advice before making any decisions about property
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Reader Question: I live in the UK and own a French holiday home bought before my marriage. My wife is not interested in it, so I am considering leaving it to my nephews. Is it necessary to have a French will to do this and would they have to pay a lot of inheritance tax?
I will infer from the question that you do not have children, and therefore do not need to consider the reserved rights of inheritance for children.
If you wanted to leave the French property to your nephews, then you would need a will to achieve that. That could be a UK will or a French will.
We generally recommend that you use a French will for French assets, and a UK will for UK assets, as it makes it easier and cheaper for the administration of the French estate.
The problem you have is that French inheritance tax would apply (whether you used an English or French will and whether or not English law applies).
Nieces and nephews are heavily taxed in France. They each benefit from a tax-free allowance of €7,697. Above that, 55% inheritance tax is applied.
If nephews or nieces who are not bloodline, they are taxed as non-relations, at 60% less a tax free allowance of €1,594.
Read more: Inheritance alternatives for non-blood relatives in France
The tax is due within 12 months of death (for a UK resident deceased), after which interest accrues at 0.2% per month, plus penalty charges.
I note that your spouse does not want the property, but you could reduce the tax bill if you left her a life interest over the property (the right to use the property during her lifetime).
Read more: EU commission replies: Latest on French inheritance law challenge
What is meant by life interest in France?
This is useful because the value of her life interest reduces the taxable value that the nephews pay tax on.
So, if she is aged 70 to 80 at your death, the life interest value is 30%. The nephews pay tax on the remaining 70%.
Aged 80 to 90, the value is 20%, 90+ it is 10%.
She could, of course, allow the nephews to visit the property. They could even buy out her share based on the life interest value at the date of sale, not the date of inheritance. She would, however, be responsible for the general running costs of the property, and maintenance (although the nephews might agree to pay for that).
