Understanding the Tontine Clause –French Property and Property
If you are not a French resident, but you have property or have inherited property in France, you may know that the French legal system, particularly when it comes to property and inheritance, can be somewhat complex. The Tontine Clause, also known as the clause d’accroissement, is something you may encounter when dealing with jointly-owned property in France. This blog covers all you need to know about the Tontine Clause.
If you’d like to understand how French succession rules work, read about the laws of succession in France.
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The Tontine Clause – What Is It?
When two or more persons buy a property together, a specific clause known as a Tontine Clause can be added to the French deed of sale (Acte de Vente). It is a system that determines what happens to property ownership upon the death of one of the co-owners.
The main result of the Tontine Clause is that the surviving owner is considered the sole owner of the entire property from the moment the first co-owner passes away. The Tontine avoids the typical French joint ownership, in which the deceased person’s portion becomes part of their estate and is governed by French inheritance law.
Why Use the Tontine Clause?
Married, PACS-ed, and single couples use the Tontine primarily to ensure the survivor is fully protected and secure in the shared residence. The largest benefit is securing the Survivor. The Tontine does not provide tax savings in France, as spouses and registered partners (PACS) have been exempt from inheritance tax since 2007. Nevertheless, it does guarantee the title. The clause is often required for unmarried couples (those who are not PACS’d); however, be advised that the surviving partner may be subject to a 60% inheritance tax on their inherited portion above a limited allowance.
For more on how ownership clauses like this can help secure your estate, learn about avoiding succession and the Tontine clause.
Important Things to Think About
Generally speaking, the Tontine Clause cannot be added to a deed after it has been signed without the consent of all parties. Other estate planning choices should be weighed against the high 60% inheritance tax for non-PACS partners, which is a significant barrier. The clause also does not apply to the deceased’s other assets; it applies only to the actual property into which it is written. Although it protects the survivor, because the property is effectively removed from the estate at that point, it may affect the children’s future inheritance from the first-to-die parent.
Read the official French government guide on inheritance and gift tax.
In Conclusion
The Tontine Clause is a useful but intricate instrument. Although it may be the ideal way to secure your property, you should get competent legal counsel from a French Notary or foreign property specialist before purchasing because of the tax implications, particularly for unmarried couples. Find a French notary via the official directory of Notaires de France.
If you need help with French Probate, contact French Probate Matters on 020 8150 2010 or info@frenchprobatematters.com.
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