Friday, 31 August 2007

Final stretch - The Apartment Is In Sight

We delivered every bit of documentation they might ever want (or imagine they want!) to the Notaire's office today. Her assistant (who is getting our dossier together) was charming and helpful. Even asked if we would like an interpreter at the final signing on October the 9th!!
This of course might be because she was not impressed with our French........

We questioned a section on the form we had to fill in about marital regimes, etc.

She explained that the default in England is different to that in France - and we can choose. We intended selecting 50:50 anyway since this minimises (as best we can) the inheritance problems here under the old set-up.

However we are hoping to insert in the purchase contract that if either of us dies, the other will 'inherit' the whole house (contrary to the norm in France) since this should now be possible under the recent inheritance rule changes......
It will be interesting if the recent changes actually work like this in practise!
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We are still astonished at how many English property owners down here do not understand the strict inheritance rules that are totally inviolate. Even if the rules have changed, it cannot be back-dated to previous property purchases because whatever is in the actual purchase contract, stands for eternity.

Very simplistically, as explained to us by the Notaire when we bought our current house (and as we knew beforehand):

1. Irrespective to what your wills say, when a married couple own a property (or part of a property) jointly and one dies, the children inherit a set proportion - for example 50% if there is one child; 2/3rds if there are two (split between them).

2. The surviving spouse only inherits at best 50% if there are children.

3. Children from a previous marriage inherit as well, so it can become complicated if one or both partners were previously married with children.

4. Any inheritance tax due is a debt on the individuals who inherit. Unlike in England, where the tax is deducted from the estate before it is distributed, here you as an individual have to pay any tax due - even if you cannot 'realise' your inheritance - ie the property you have inherited a part of, cannot be sold (see below).

5. Where a property is partly owned by under-aged children - it cannot be sold until they are considered old enough to make a decision of agreement (age 18)! There is a special court you can apply to, to get agreement to sell whilst they are under-aged, but this is expensive and not often granted unless the circumstances are exceptional.

This is what happened to an English couple we knew who had a holiday home in our village:

They bought the house here many years ago and renovated it over about 20 years. They saw it as their 'retirement fund' since they only had very small pension benefits accruing in England where the husband worked.

They were a couple of years off retirement when sadly the wife died unexpectedly.

They had two adult daughters, one of whom had died a few years earlier leaving five young children, all under the age of eighteen.

The property was now owned by seven different people:

The husband ended up owning 1/3rd of the property (and he no longer had a sufficient 'retirement fund').
One daughter inherited 1/3rd.
The remaining 1/3rd was now split between 5 under-aged children.

They were all liable for inheritance tax. However the house could not be sold.

The family took their case to the special court in Paris and, having paid a small fortune for good representation, the Court finally agreed that they would take the decision to sell on behalf of the 5 children.

It is fair to say that the family was traumatised by all of this 'officialdom' at a time when they were grieving.
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An English couple we know see this French system for inheritance as ideal. They have a fixed view that all that a married couple accrue and own is, by absolute right, their children's even when the couple are still alive.

I do not see this. I understand the consternation when children do not inherit their parent's assets as they expected, but I am firmly of the view that you as an individual have a right to spend your assets or to leave them to whom you wish - if you are mentally stable, and not coerced in any way when you make these decisions. Obviously this assumes the children are adults!

Both Richard and I feel very strongly about this. We have both felt the frustration with our own parents' fixation with 'leaving an inheritance for our children'. They have worked hard all their lives and their money should be spent making their later years easier - not left untouched in the bank 'for the children when we die'.

If your parents brought you up well, provided you with an education and you are in reasonable health - then they have equipped you with all that is required to go out and earn yourself a living. What more should you ask for in this day and age?!

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