This article is for general information only. You should not act or refrain from acting in reliance of it. You should always obtain professional advice on the facts of your particular case. Nothing in this article constitutes financial advice. The owner of this site accepts no liability.

 

French succession law has a system of forced heirship whereby certain family members have a right
to inherit part of your estate.
This means that your children will automatically inherit a share of any part of your estate which is
subject to French law, even in presence of a spouse. There are ways to deal with this, and a tontine
clause is one of them.

A tontine clause is the French equivalent to a joint tenancy in the UK: on the first death, the
deceased’s share of the property passes to the surviving tontine holder. The person who dies first is
deemed never to have been an owner , and the surviving owner is considered to have been the sole
owner from the start. Whilst it can be used in relation to any assets, it is most commonly used when
acquiring real estate.

Tontine ownership may have adverse consequences and, depending on your specific family
circumstances, may not be appropriate. You should bear in mind that the surviving owner may have
to pay French inheritance tax on the first death. Whilst there is a full exemption for inheritance
between married couples and civil partners, assets passing to cohabiting partners are taxable at 60%
above a small allowance of €1,594. As an exception to this rule, when the property makes up the
main residence of the purchasers at the time of death and its value is less than €76,000, the survivor
only pays transfer duties at a rate of 5.81%.

Importantly, the decisions regarding properties bought under a tontine arrangement require unanimity.
Even if the owners no longer get along or wish to separate, unanimity is required to sell the property
or agree that one of them will buy the others share.
For the above reasons, it is generally recommended that unmarried couples to avoid purchasing
using a tontine clause.
If you are interested in purchasing with a tontine arrangement then you should remember that the
clause must be inserted directly into the deed of purchase; afterwards it is too late!

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