There are several types of gift procedure in France that can be used for inheritance planning, but their use needs careful consideration.

Historically, the use of a gift procedure has been popular in France because of the nature of French inheritance laws and the level of inheritance taxes potentially payable.

However, over the past decade there has been some relaxation in these laws, giving greater protection to the surviving spouse, and there has also been a substantial increase in inheritance tax allowances.

In addition, the rules on gifts have been tightened, by increasing from 7 to 15 years the period before the gift is discounted for inheritance tax purposes (although not all gifts come within the ambit of inheritance laws).

So some care is needed before you consider adopting a gift procedure and best you do not leave it too late!

If you decide it is worthwhile, then what are the options available and the implications of these options?

When considering making a substantial gift, most people orientate themselves towards a notaire. Such a route is mandatory in the case of the gift transfer of real estate and a donation-partage (see below), but a gift can also be made without any formality.

Whether it would be prudent to make a substantial gift without a written procedure may be another question, for unless it is properly recorded it might later create conflict during an inheritance process.

Moreover, there is a gifts tax in France (droits de donation), and where the gift exceeds the allowances that are available under the tax it is necessary to make a formal declaration of the gift to the French tax authority.

Types of Gift Procedure.

Broadly speaking there are four different types of gift procedure.

ii. Donation Entre Epoux– This is a gift procedure between man and wife that grants a larger proportion of your estate to your spouse on your death. There are alternatives to this procedure, such as a French marriage contract.

iii. Donation en avance de part successorale– This is an advance on the assets that would otherwise be transferred to the beneficiary at the time of the succession.

iv. Donation hors part successorale– This is a gift made outside of the reserved portions of the inheritance.

Gifts Conditions

Should you wish to make a gift, then you can impose conditions to the grant of the gift.

Thus, you can impose an obligation on the beneficiary to undertake certain tasks, to disallow sale of the asset, to require the return of the asset in the event of their death, etc.

Taxes and Fees

Where you make a gift through the auspices of a notaire fees are always payable, which can be a not insignificant consideration, as the fees are based on the value of the asset being transferred.

In addition, in the case of the gift transfer of real estate stamp duty is payable.

Finally, where the gift allowances are exceeded a gift tax is payable.