Reader TTS

First, it is important to accept that there is a cultural difference between the British and the French that may make it harder to get your notaire to understand what you want to achieve.

Simply put, some solutions for dealing with complex family situations may privilege the spouse and disadvantage the children, which is not, traditionally, the French way. Britons tend to

want their children to have as much of their estate as possible after their death, but, crucially, this should happen after both members of the couple have died and not before. French people

feel your life’s work is not for your benefit but for your children’s, and the surviving spouse must depend on their children. French law may oblige children to support parents in old age,

but this may not carry much weight if those children live in another country, like the UK. Children may also feel little obligation to a step-parent, so the survivor may be on their own and

must be able to keep themselves. However, a step-parent owning all the assets creates issues, as tax on gifts to stepchildren means 60% inheritance tax and little allowance. So, how to

ensure the survivor keeps the asset, may use it as they wish (keeping you happy) and then leaves it to the stepchildren without any punitive tax so the kids (and notaire) are happy? This is

where _usufruit_ comes in (one long- standing client does not like that name and tells everyone she has a ‘juicy-fruit’!) It literally means the use of the fruits, so the life interest. It

is widely used in France, but also exists in the UK, called a usufruct, so the same word but in Latin. Either word is prettier than the other French legal term _démembrement_, which means to

dismember. SO, WHAT DOES IT DO AND WHERE CAN YOU USE IT? The point is it separates ownership into two; the _usufruit_ usage and the _nue-propriété_ (bare ownership). It means when a spouse

dies the asset is not legally owned by the survivor, but they may, in almost every way, treat it as though it is. The children own the bare ownership but will get no immediate benefit. The

_usufruit_ may be applied to almost any asset, including money. All benefits of use, including income and all tax go to the _usufruitier_ (life interest holder). The spouse gets to keep the

asset and can use it as they wish, receive any income from it, essentially carrying on as if they were the owner. When they die, the assets pass to the stepchildren as though it had come

from their natural parent, avoiding punitive inheritance tax. It sounds wonderful, the best of both worlds, but there is one issue, which may be problematic if the survivor wishes to sell

the asset, such as the home. A sale means the shareholders (which is essentially what the children are) stand to lose their rights and must agree to a sale and have a right to take their

‘share’ at this point. People who have lived in France before tend to like the _usufruit_ option more than those who are very new to France but it could be problematic for expats who might

not wish to remain in France on their own. The other point is that the _usufruitier_ is legally obliged to maintain the value of the assets to the best of their ability. This is no issue for

property, but can be problematic for money as a _usufruit_ may also be used for money – and can get complicated, needing other solutions. For most property, a _usufruit_ is put in place by

a simple French will. One important point to note is that the life interest / bare ownership is not inheritance tax free. Like the asset, it is split into two parts, with the split depending

on the age of the _usufruitier_. The value that it is taxed is lower than receiving full ownership. So, someone liable to inheritance tax (not a married or PACSed couple, as there is no

inheritance tax) inheriting the _usufruit_ at 81 years old may be assessed on 20% of the value of the assets they receive. In practice, tax is rarely applied until the full ownership is

received. I said money and the _usufruit_ could get complicated – twice, as it is important! – causing rows and court cases from children contesting how money was invested / maintained. A

common investment route in France is via an _assurance vie_ and this can have a beneficiary clause known as a _quasi-usufruit_ which places no obligation on the survivor to maintain the

capital. Yes, the _usufruitier_ could gamble it away but it creates a debt on the estate, meaning surviving assets are sold on their death to cover it. So the _usufruitier_ can invest and

spend money how they please, which makes it useful. Succession planning is complex, everyone is different, so I recommend professional advice. _This column was written by Robert Kent of

Kentingtons financial advisers._ _See www.kentingtons.com_