Avoiding Succession
As detailed on our Succession page, French law contains automatic and statutory entitlement to the children of a deceased person. This means that should a couple marry then buy a property in France, if one of them subsequently pass away the children automatically inherit a share of the property. This can cause hardship for the children especially if the only asset is the French property. It may be that French Inheritance tax will apply to the children, even though they may not actually realize cash assets from the property because the surviving spouse still resides in the property and uses it as their home.
To protect from this scenario and to also protect the surviving partner, when purchasing the property a special clause known as a Tontine Clause can be added to the title. The Tontine Clause basically forces the property to be a jointly owned asset, in this way should one of the spouses pass the property does not pass to the children and will become the sole property of the surviving spouse.
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When to add a Tontine Clause
It is important to ensure the tontine clause is added to the title of the property when it’s purchased. This change cannot be done once the title has been transferred. Here lies the major setback with the Tontine Clause. When couples buy property together, it is typically at the most amicable stage in their lives together. If the Tontine Clause is added it cannot be undone, not even by a French court, this means that should the couples relationship breakdown and decide to separate the property cannot be sold unless both parties agree. If one party decides to remain in the property there is no way the other party can force the sale of the property.
Tenants in Common
This is very different to UK property law, most couples buy property jointly and perhaps to change to tenants in common as part of their estate planning. If they fall out, Courts and Judges can decide what should happen to the property regardless of whether the couple are joint owners or tenants in common. When buying French property, the default position is that it will be owned as tenants in common (each person owns a specific share) this actually ensures the French succession rules can be adhered to. The Tontine Clause undoes the tenants in common, but this can have serious consequences should a couple separate.
When buying property in France always consider the long-term scenario including death and separation, especially when there are children from separate relationships and or you are what is referred to as asset rich and cash poor i.e your only real asset is the property. Always take advice from a French Notary based on your circumstances. If you are buying a property in France and would like us to pass your details to a Notary to assist and advise just let us know.