France Estate Planning summary

French Estate Planning, French Family Law and French Private International Law issues are summarized below:

1. Estate Taxation in France

i. Inheritance tax and lifetime gifts
Gift and inheritance taxes are calculated on the beneficiary's net entitlement after applying tax-free allowances and deducting liabilities. Liabilities are only deductible under certain strict conditions.

ii. Wealth tax
IFI (Impôt sur la Fortune Immobilière) applies to non-professional real estate property assets.

2. Succession Planning in the France
i. Applicable law
Since the entry into force of the Succession Regulation on 17 August 2015, succession to an intestate's movable and immovable property is governed by the law of the state in which the person who dies intestate had their habitual residence at the time of death.

If a person dies without leaving a will, the distribution of his/her assets will be governed by the French intestacy law.

ii. Wills in France
In France it is possible to organize the transmission of your estate through a Will which must comply with a certain number of rules. The most used Will forms are the Holographic Will and Authentic Will.

France has ratified the Hague Convention of 5 October 1961 regarding the form of Will dispositions.

iii. Testamentary freedom restrictions – forced heirship in France
Under the French forced heirship rules, a certain portion of the estate (hereditary reserve) cannot be disposed of by lifetime gift or will other than to descendants and, under certain conditions, to the surviving spouse. The remaining portion of the estate that can be freely disposed of depends on the number of children the deceased had:

  • One child: ½
  • Two children: ⅓
  • Three children or more: ¼

3. Trusts and Foundations in France
It is not possible to create a trust under French law. French courts recognize the effects in France of common law trusts, provided they comply with the mandatory rules of French law. In most cases this can be achieved without major difficulty.

Foundations cannot be used in France for estate planning purposes and are controlled by a representative of the State. They only acquire legal personality and the right to receive gifts or legacies upon special authorization, which can only be granted under very strict conditions and provided that the only purpose of the foundation is to promote public welfare. France may recognize foreign foundations.

4. Matrimonial Issues in France
Future spouses can get married with or without a marriage contract. If they get married without a marriage contract, the regime of community reduced to acquisitions (“régime de la communauté réduite aux acquêts”) will apply automatically.

Spouse can also make the choice of other regimes. France recognized five matrimonial property regimes.

A same-sex couple is granted the right to get married under French law and benefit from all the benefits and duties of the spouses.

Civil Partnerships are recognized in France (Pacte Civil de solidarité). France also recognizes same-sex Civil Partnerships.

There are four cases of divorce. Some divorces are of the litigation type (divorce for fault, for definitive deterioration of the marital bond or for acceptance of the principle of separation). Conversely, divorce by mutual consent is of the non-contentious type.

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