Property Ownership Options
- Adopt a French Marriage Contract
- Enter into a French Civil Partnership
- Make a Family Inheritance Pact
- Make a Will
- Create a Trust Structure
- European Succession Law
Financial Planning Options
- Buy or Improve with a Mortgage
- Make a Gift Between Man and Wife
- Make a Gift to Children/Grandchildren
- Make a Gift to Others
- Take out Life Insurance
4.10.1. What is a Gift Between Man & Wife?
In the past it has not been unusual amongst married couples to provide for the surviving spouse through a particular type of gift procedure, which is used to increase the amount of the estate left to the surviving spouse.
The gift procedure is called donation entre époux.
This procedure differs from other forms of gifts (donations) in that it only takes effect on the death of one of the parties. For this reason it is sometimes also called a donation au dernier vivant.
The use of donation entre époux dates from a period before 2002, when the rights of a surviving spouse over the family home were significantly less than they are today. As a result of increased security to a surviving spouse, it is now less frequently used.
Where there are only children from the same marriage it rarely serves any useful purpose.
It is probably only appropriate to use this procedure in the absence of a French marriage contract granting protecting to the surviving spouse, or property held en tontine.
Nevertheless, it may be of some greater use where there are children by a previous relationship, due to the difficulty in using a marriage contract to give added protection to the surviving spouse (see previous sections).
4.10.2. Effect of Gift Between Man and Wife
It will be recollected from the section on 'Inheritance Rights' that the rights of a surviving spouse depend on the type of matrimonial regime and the presence, or otherwise, of children.
Where there is a donation entre époux the rights and options of the surviving spouse over the estate of the deceased are increased from those that would otherwise apply under the normal rules of inheritance, and is particularly suitable to those with children outside of the marriage unable to enter into a French marriage contract.
Where there are children from within or outside of the marriage, then, using a donation entre époux the options of the surviving spouse depend on the number of children as follows:
Table: Surviving Spouse Options
|No of Children||Entitlement|
|One Child||1/2 of Freehold + 1/2 Life Use|
|Two Children||1/3 of Freehold + 2/3 Life Use|
|Three + Children||1/4 of Freehold + 3/4 Life Use|
|Any No||Life Use of Whole Estate|
It will be recollected, that, in the absence of a donation entre époux, provided the children were all from the marriage, the surviving spouse would only have the option of 1/4 of the freehold, or life use of the whole of the property.
If there are children from outside of the marriage then the surviving spouse is only granted the right to 1/4 of the freehold, without the right to opt for life use.
In either case the surviving spouse has the right to remain in the principal home.
Remember also these amounts only refer to that part of the estate belonging to the deceased spouse, i.e. 50% of the property. So a spouse electing to take one quarter of the freehold will actually own 5/8 of the freehold of the property, with 3/8 in life use.
Nevertheless, the increased range of options available to the surviving spouse with a donation éntre epoux does allow them greater freedom to determine what would be in their best interests.
In the past, most surviving elderly spouses have opted for life use, as this option was normally the most fiscally advantageous option. Since 2007 and the abolition of inheritance tax between man and wife, this has become less important for most people.
Thus, a younger surviving spouse might well consider it preferable to opt for some of the freehold of the property, as it would give them stronger rights over the property, which they would need to occupy for many years to come, during which time they may remarry.
Conversely, where the estate included one or more rental properties in it, a surviving spouse might prefer the life use, from which they could then take all the income and thereby maintain their standard of living.
Whichever option is chosen, (whether it be increased freehold or life use), any arrangement which splits the ownership of property is a recipe for conflict.
Ideally, therefore, a French marriage contract, or property purchased en tontine or use of European succession regulations is to be preferred, provided any later potential inheritance tax implications can be overcome.
If there are no children, then the issue is a lot clearer. If the parents are alive, the donation entre époux enables the surviving spouse to receive the whole estate, where otherwise (in the absence of inheritance planning) the parents would be entitled to up to half of it.
Where there are neither children nor parents alive it still enables a surviving spouse to prevent 'family heirlooms' being inherited by brothers and sisters.
4.10.3. Gift Procedure
If you wish to make a donaton entre époux you should contact your local notaire who will be able to process the transaction. You can do so yourself by way of a will, but you would be well advised to get professional advice from a good notaire.
The notaire fees for making a gift between man and wife is fixed by law at €125 (2020).
There is also gifts tax payable if the gift is over €80,724 (2021).
On inheritance there are notaire fees for 'opening' the gift based on a percentage value of the inheritance (in the broadly the same terms as a will).
So it can actually be a potentially expensive option! Indeed, that is one reason why some notaires like it!
Whilst the use of a donaton entre époux is simple and effective, the same effect could also be obtained through the use of a will. However, in either case it pays to ensure careful drafting.
A donaton entre époux can later be rescinded by one or both of the parties, provided it does not form part of a marriage contract. Where it occurs unilaterally, the notaire is under no obligation to advise the other party.
Indeed, they are bound by a code of professional secrecy so would be unable to divulge any such change of heart on the part of one of the spouses. The gift is also automatically annulled on divorce.
Next: Gifts to Children
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