# French Inheritance tax for US citizen



## pvigneault

Sorry if this is a big repeated question.
My husband and I are US citizens, now French residents with CDS for 2 years, soon to be 3 years. All our assets are in the US -- property, stocks, etc. except for one French bank account. We have no property in France. We have a US family trust to distribute our assets to our US children, families and charities. 
If we both died in France, would our heirs have to pay French inheritance tax? If so - How would France "bill them"?
I realize there would be a French death certificate involved, dying in France. 

I did read in the forum that under French inheritance LAW (not TAX) that we could make a French will that would designate our wishes to distribute as we want in our native country-aka US. 

Any help is appreciated.
Thanks


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## Bevdeforges

How your estate is divvied up is normally determined by the laws of the place in which you are resident when you die. Under EU regulations, there is a provision whereby you can arrange to have your estate distributed according to the laws of your country of origin - though the French tax rates will apply to the distribution.

Trusts are a bit tricky, though as far as I can tell, France now recognizes foreign trusts so that may not be that big an issue. In any event, to invoke the estate law from "back home" you probably should speak to a notaire - perhaps to draw up a will that specifically incorporates the choice of using US law (or any US wills you may already have).


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## pvigneault

Thank you Bev
I'm still very curious how the French government would know who receives our assets in the US and how they would "tax them". Anyone have any experience with this?


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## newyorkerinparis

pvigneault said:


> Thank you Bev
> I'm still very curious how the French government would know who receives our assets in the US and how they would "tax them". Anyone have any experience with this?


I just discussed this issue with a French estate tax lawyer, as I had many of the same questions as you. He told me that if I die while still a French resident, the French government would know that I had assets in the US based on my annual tax returns, which include a list of all my worldwide bank accounts. This information would enable them to figure out how my US assets are being distributed. It's not a certainty that they would do this, but if they choose to follow up in this way they could impose French estate taxes on my heirs in the US. Apparently, there are agreements between the US and French under which each country will help the other enforce its tax laws -- meaning that if the heirs don't pay their French taxes, the US IRS will take action.

In your case, the trust could be a big problem, as distributions to trusts are taxed at extremely high rates. 

The good news is that there are strategies you can use to minimize French estate taxes on your US-based assets. You might want to consult a French estate tax lawyer to discuss this further. If you'd like the name of the lawyer I consulted, feel free to DM me.


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## Bevdeforges

That said, the US is not known for their "cooperative attitude" toward other countries looking to enforce their laws for taxes. (While, at the same time, being rather annoying about breaches of US tax rules imposed on overseas entities - like FATCA.) 

Another route for getting further information might be to consider taking a membership in AARO for your first few years in France. AARO is very involved in financial issues that affect US citizens living overseas and may well have some information available to members about inheritance issues. (They also have quite a few members who are tax attorneys.) Although they are located in Paris, there are lots of files and reports that seem to be members only on their website and they host an annual tax seminar which is viewable online. AARO - Association of Americans Resident Overseas


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## Crabtree

How would they know-well the estate of the deceased has to be dealt with by a notaire and he will make enquiries about assets and NOK and any taxation due is collected by them before the estate is finalised


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## pvigneault

Thank you all-lots to consider here. 
I guess another issue I'd like to clarify-being a French resident, would it matter where I died? Is the big issue-being a French resident? So if I died visiting in the US, since I'm a French resident, my estate would still be administered there? Or is it wherever the death certificate originates?
I think it's estate lawyer time.


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## newyorkerinparis

pvigneault said:


> Thank you all-lots to consider here.
> I guess another issue I'd like to clarify-being a French resident, would it matter where I died? Is the big issue-being a French resident? So if I died visiting in the US, since I'm a French resident, my estate would still be administered there? Or is it wherever the death certificate originates?
> I think it's estate lawyer time.


What matters is where you are a resident at the time of your death, not where you die. Otherwise, you could end up having your estate administered by a country you had no connection to at all, simply because you happened to be on vacation there at the time of your death.


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## pvigneault

ok so to go another level from here. Could I be a dual resident of France and the US since I still have a permanent home in the US?


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## newyorkerinparis

pvigneault said:


> ok so to go another level from here. Could I be a dual resident of France and the US since I still have a permanent home in the US?


If you're a U.S. citizen, you're always treated as U.S. tax resident, regardless of where you live. However, the tax treaty has rules for determining which country's law prevails in cases where you meet the definition of residency for both France and the US. If you're actually living in France, it's likely that those rules would give France priority, except as applied to specific matters dealt with specially under the treaty, like real estate located in the US.


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## pvigneault

Thank you all very much-there's alot to think about. We love living in France-so we're not going any where soon. Especially for tax reasons.


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## Bevdeforges

Just a note: there is, of course, a tax treaty between the US and France. But there is also a separate Estate tax treaty that you may want to take a look at. Tax Treaties between France and the United States It may have more specifics on what you are interested in.


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## Milou

pvigneault said:


> Sorry if this is a big repeated question.
> My husband and I are US citizens, now French residents with CDS for 2 years, soon to be 3 years. All our assets are in the US -- property, stocks, etc. except for one French bank account. We have no property in France. We have a US family trust to distribute our assets to our US children, families and charities.
> If we both died in France, would our heirs have to pay French inheritance tax? If so - How would France "bill them"?
> I realize there would be a French death certificate involved, dying in France.
> 
> I did read in the forum that under French inheritance LAW (not TAX) that we could make a French will that would designate our wishes to distribute as we want in our native country-aka US.
> 
> Any help is appreciated.
> Thanks





pvigneault said:


> Sorry if this is a big repeated question.
> My husband and I are US citizens, now French residents with CDS for 2 years, soon to be 3 years. All our assets are in the US -- property, stocks, etc. except for one French bank account. We have no property in France. We have a US family trust to distribute our assets to our US children, families and charities.
> If we both died in France, would our heirs have to pay French inheritance tax? If so - How would France "bill them"?
> I realize there would be a French death certificate involved, dying in France.
> 
> I did read in the forum that under French inheritance LAW (not TAX) that we could make a French will that would designate our wishes to distribute as we want in our native country-aka US.
> 
> Any help is appreciated.
> Thanks


Thank you for this thread. I also have a question and would appreciate some helpful feedback. What are the French inheritance tax implications for the following scenario:
1. I (a US citizen) and my spouse (Italian citizen) decide to retire in France;
2. We sell our home in the US an buy a house in France for $500K;
3. I derive my income from non-French pensions and savings from a U.S. bank account;
4. We open a joint French bank account but only keep monthly living expense amounts in it;
5. I die before my spouse and stipulate in my French will that all of my estate passes onto my spouse; 
6. After her death, the estate comprised of (a) French house now worth $550K and (b) funds in a US bank account are willed to our heirs: 2 adult children who permanently reside in the US.
And so my question is: what is the financial outcome and difference on my two children's inheritance IF we'd retired and remained in the US (bought the same priced house and same US bank account) versus the amount they'd receive as a result of our retirement in France and after French Inheritance Tax)?
Thank you very much to anyone who can shed some practical light on comparing the two scenarios.


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## Bevdeforges

The answer isn't all that simple. First of all, if you move to France, you will then pay income tax in France and potentially some in the US, too. The US-France tax treaty indicates which income is subject to which taxes and how each side has arranged for you to declare your worldwide income, and then adjust to avoid double taxation. (The methods vary between the US and France.) When you say "non-French" pensions, those are covered in the tax treaty - unless they are from somewhere other than the US, in which case they may (or may not) be covered by the relevant tax treaty. Again, the main objective is to avoid or reduce the double taxation. (No system is perfect.)

If you are resident in France at the date of your death, your estate is subject to French rules and tax rates. There is, however, an EU regulation in place that allows you to stipulate that your estate be distributed according to the rules of your home country. But you must set up a document with a notaire here in France to register your wishes. (I think you may even be able to reference your US will as part of this - but you would need to talk to the notaire about this to be sure.) Just be aware - this option allows you to divvy up the property according to the rules of your home country, but once divided up according to your wishes, the French inheritance tax rates apply. French inheritance tax comes in at much higher rates (and with much lower "allowances") than in the US.

There is, if you are interested, also a US-France inheritance tax treaty which explains some of the other details. The tax treaties


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## T Elliot

newyorkerinparis said:


> I just discussed this issue with a French estate tax lawyer, as I had many of the same questions as you. He told me that if I die while still a French resident, the French government would know that I had assets in the US based on my annual tax returns, which include a list of all my worldwide bank accounts. This information would enable them to figure out how my US assets are being distributed. It's not a certainty that they would do this, but if they choose to follow up in this way they could impose French estate taxes on my heirs in the US. Apparently, there are agreements between the US and French under which each country will help the other enforce its tax laws -- meaning that if the heirs don't pay their French taxes, the US IRS will take action.
> 
> In your case, the trust could be a big problem, as distributions to trusts are taxed at extremely high rates.
> 
> The good news is that there are strategies you can use to minimize French estate taxes on your US-based assets. You might want to consult a French estate tax lawyer to discuss this further. If you'd like the name of the lawyer I consulted, feel free to DM me.


I would love the contact info for your lawyer please. Many thanks!


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## Chrissippus

Milou said:


> Thank you for this thread. I also have a question and would appreciate some helpful feedback. What are the French inheritance tax implications for the following scenario:
> 1. I (a US citizen) and my spouse (Italian citizen) decide to retire in France;
> 2. We sell our home in the US an buy a house in France for $500K;
> 3. I derive my income from non-French pensions and savings from a U.S. bank account;
> 4. We open a joint French bank account but only keep monthly living expense amounts in it;
> 5. I die before my spouse and stipulate in my French will that all of my estate passes onto my spouse;
> 6. After her death, the estate comprised of (a) French house now worth $550K and (b) funds in a US bank account are willed to our heirs: 2 adult children who permanently reside in the US.
> And so my question is: what is the financial outcome and difference on my two children's inheritance IF we'd retired and remained in the US (bought the same priced house and same US bank account) versus the amount they'd receive as a result of our retirement in France and after French Inheritance Tax)?
> Thank you very much to anyone who can shed some practical light on comparing the two scenarios.


I wonder if you sold your US home after you were already resident in France whether the capital gains on the sale would be subject to the French capital gains tax?

I also wonder how the Transfer on Death provisions of US bank and brokerage accounts interact with the French inheritance laws since TOD assets do not become part of the estate and do not go through probate. If the TOD does not protect your US financial assets from the French fisc it might be worthwhile relocating them to a jurisdiction with which France does not have an inheritance treaty, possibly Singapore or Panama?

I did look up the US/France estate tax treaty, which you can find below and is worth reading. It doesn't answer questions like the ones I just posed however.



https://franceintheus.org/IMG/pdf/french_us_estate_tax_treaty.pdf


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## T Elliot

My understanding is that if you sell your US home after having moved to France, the proceeds of that sale will be subject to French tax. Also, you kids are gonna get a BOATLOAD less if you become tx resident in France than if you just stay in the US. Us allows an estate of like $5M to pass without inheritance tax, while in France, your kids get only about 108K Euros exemption EACH before they get hit with a 25-30% inheritance tax. The price of living in France. Please know these are just my understandings and I would think Bev could provide much more insight on these issues. Best of luck!


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## Bevdeforges

Despite your confidence in my abilities, I have to say that I haven't really looked into French inheritance taxes to any great degree. I also think you'll find that many more people here in France simply don't bother with having a will because the State controls the greater proportion of how an estate is divided (and taxed). It may have something to do with the French attitudes toward money and wealth - which are currently under discussion in a thread over in the Bistro: So how well-off are the French? 

What I've seen in my French family is that most "estate planning" revolves around making sure there is adequate cash in savings, investments and insurance to cover the estimated inheritance taxes for the property assets that a person wishes to transmit to their children or other family members so that the property doesn't need to be sold to pay the taxes. It used to be a real hassle to care for a surviving spouse since the system was set up pretty much to assume that everything goes to the children and then the children are responsible for taking care of their surviving parent - but with "blended families" that has forced some changes to the laws (that were, in my opinion, much needed).


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## T Elliot

I think a lot of Americans would love it if you would post on reliable English-speaking Notaires and French Tax attorneys and Accountants who can help this of us who are retiring to France and all face the same issues: income tax, inheritance tax, and filing our dual returns every year. What do you say? I know you can't endorse anyone personally, but even a couple of links to the professionals we all need would be SOOOO helpful! Many thanks!


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## Bevdeforges

I have always done my own taxes - admittedly with the help of a software program which is all in French, but is the one my French husband used for quite a few years before I took over (as the "accountant" in the family). The only notaires I have ever dealt with here made no claims to speak any English (again, accompanied by my French husband who I could question later about details I missed in the discussion). 

As a former professional accountant (complete with a CPA) I am not a big advocate of using paid tax preparers for filing US forms. I have generally had pretty simple tax returns when I was still filing back in the States, but I no longer am required to file back there - and I find they keep changing the forms, so whatever knowledge I did have is aging fast. 

That's what the forum is for. Ask your questions and let's see who we can flag down who can help with the answers or the best sources for finding out for yourself. Nothing you see here online is a definitive answer, only an opinion of someone claiming to have found an answer for themself. And as the old saying goes, "your mileage may vary."


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## newyorkerinparis

T Elliot said:


> My understanding is that if you sell your US home after having moved to France, the proceeds of that sale will be subject to French tax.]


Under the US-France income tax treaty, if you're an American citizen, you will not need to pay French taxes on capital gains on the sale of real property located in the US. You will need to declare the gains on your French tax declaration, and the amount will be counted as part of your total household income, but you will receive a credit equivalent to the amount of French taxes that would otherwise be due.


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## Chrissippus

T Elliot said:


> My understanding is that if you sell your US home after having moved to France, the proceeds of that sale will be subject to French tax. Also, you kids are gonna get a BOATLOAD less if you become tx resident in France than if you just stay in the US. *Us allows an estate of like $5M to pass without inheritance tax*, while in France, your kids get only about 108K Euros exemption EACH before they get hit with a 25-30% inheritance tax.


Since 2018 the US estate tax exemption is $11.18 million. Only 0.2% of households will ever pay any estate tax. 

Of course it is understandable that we all want to minimize our tax burden as much as possible, but the now basically non-existent US estate tax permits the progressive concentration of wealth in rich families across the generations. The result is the much greater inequality in the US and UK by comparison with countries like France and Germany. A more equal society is better in every way.


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