# US/France inheritance/estate planning



## mikeinfrance

US/France estate planning
I want to set up something that should I become incapacitated or die, my wife (French), or if she too is deceased, the guardian of my children, would easily be able to manage my finances and have access to funds/property when needed. Ideally I would also be able to specify when the children should have access to certain assets (getting everything when they turn 18 just seems like a bad idea to me…). If I were still living in the US, setting up a trust would seem like the normal solution. But I live in France which creates issues for trusts (discussed below). 
Does anyone know of a solution that allows assets (both financial accounts and real estate) to be readily accessible to my children’s guardian should I die or become incapacitated and allows me to have some control over when my children should have access to assets? I want to avoid things being tied up in probate (thus a will doesn’t seem to be the solution), and I don’t want to create massive reporting requirements or negative tax consequences (which is where trusts run into issues). Does anyone have a solution? Is a trust the only option? And if so, how do you minimize the issues created by France?

Issues for trusts under French law:

Reporting - declarations N 2182 Trust 1 and N2181 Trust 2 seem to require a lot of work to complete, and it seems to me that 2182 trust 1 would be required every month since I would want my checking account included in the trust to ensure that bills can continue to be paid – reports are required within 30 days for: “toute nouvelle mise en trust ou toute sortie du trust de biens ou droits, toute transmission ou attribution de biens, droits ou produits du trust et, plus généralement, toute modification de droit ou de fait susceptible d’affecter l’économie ou le fonctionnement du trust concerné” (N 2182 Trust 1 not).
Taxes Since I would want assets to remain in the trust after my death so that they can be administered for my children, would the provisions of 792-0bis 2b,c apply, and thus assets taxable at the maximum possible tax rate?:
2. Dans les cas où la qualification de donation et celle de succession ne s'appliquent pas, les biens, droits ou produits capitalisés placés dans un trust qui sont transmis aux bénéficiaires au décès du constituant sans être intégrés à sa succession ou qui restent dans le trust après le décès du constituant sont soumis aux droits de mutation par décès dans les conditions suivantes :
a) Si, à la date du décès, la part des biens, droits ou produits capitalisés qui est due à un bénéficiaire est déterminée, cette part est soumise aux droits de mutation par décès selon le lien de parenté entre le constituant et le bénéficiaire ;
b) Si, à la date du décès, une part déterminée des biens, droits ou produits capitalisés est due globalement à des descendants du constituant, cette part est soumise à des droits de mutation à titre gratuit par décès au taux applicable à la dernière tranche du tableau I de l'article 777 ;
c) La valeur des biens, droits ou produits capitalisés placés dans le trust, nette des parts mentionnées aux a et b du présent 2, est soumise à des droits de mutation à titre gratuit par décès au taux applicable à la dernière tranche du tableau III du même article 777.


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## Bevdeforges

Not sure where that second #2 is from (the part in French) but even on translation, it's legalese that is the kind of thing you're going to have to pay a professional to make even vaguely comprehensible. 

I assume that you are currently resident here in France, and in that case you'd probably do well to sit down with a notaire (English speaking, if you so prefer) to go through what, exactly, you are trying to achieve in setting up a trust and see what he or she can suggest within the French system. There may very well be ways to accomplish much the same goals without getting tied up in a trust document and the tax and reporting requirements that will get things tied up in. 

Other factors that will affect your situation include things like where any real assets are located at the date of your death (i.e. France or elsewhere in the world) and where your children are resident at that time, their ages and the value of your estate. See what a notaire can suggest to try to keep things as simple as possible.


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## 255

@mikeinfrance -- First, I have zero experience with trusts in France, so I'm just sharing some "food for thought." Any entity will require "care and feeding," but you might consider a corporate entity. As an example, you could form a WY C Corp., as a holding company, to hold your assets -- you can then make your children the majority owners, but issue them non- voting shares, that convert to regular common stock at an age you feel comfortable. You can hold all of the director and officer positions and designate your proposed children's guardian as your successor, until the kids are old enough to run "the firm."

Alternatively, you could form an intentionally defective off-shore grantor trust, in the Cook Islands, Belize or Nevis. In this case you'd still owe U.S. taxes, but the off-shore trust will lose accountability to the U.S. upon your ultimate demise.

Unfortunately, most solutions where you do proactive estate planning, your children will lose the opportunity to claim a "stepped-up basis," for U.S. taxation. Of course all of the above is attributed to Rockefeller's famous quote: "The secret to success is to _own nothing_, but _control everything_." Things are a bit more complicated with all of today's transparency laws, but the tenants are the same. In addition to consulting with a French Notarie, you should also consult with a good asset protection/estate planning attorney. Cheers, 255


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## Bevdeforges

First and foremost, you need to sit down and determine what is your primary objective with all this estate planning. Is what you are trying to do primarily to 1) maintain control of your estate assets so that ownership passes to your children only at certain specified ages or events in their lives; 2) avoid the payment of inheritance taxes in France or the US (or both) or 3) maintain control of "your" assets from beyond the grave (and if that, for what reason and to what end, exactly?).

In all three cases above, you method will depend greatly on what kind of assets you have, where they are located and where your children are when you die (as well as the issue of where you are resident at your date of death). Ultimately, you may need multiple entities for different types of assets.


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## mikeinfrance

Thanks for the replies - I'll have to look into what a corporate entity would entail - it's the first I've heard of that option.
I've already talked with one notaire, but he hadn't dealt with trusts before, and didn't want to give any advice on the issue, nor did he have other options to propose - as far as he knew when a kid turns 18 they get full control of their inheritance under French law (with a few exceptions if the person is deemed unable to handle their own affairs).
Pretty much everything I have is in the US - just bank accounts and land, nothing worth enough to be affected by US inheritance tax. France has much lower limits on tax free inheritance - don't know that there is a way around that short of moving back to the US before I die - but I don't want to make the French tax burden even greater by creating a trust that would be affected by 792-0bis 2b or c - so I'm hoping someone has already dealt with that issue and has an answer to share.
For estate planning:
My main concern is that there are bills to be paid every month plus if I die or am incapacitated, there are likely to be a lot of additional expenses suddenly that will need to be dealt with, and I would like to make that part as easy as possible for whomever will be dealing with that, thus I want to avoid things being blocked in probate or some other long legal process.
Secondly, I don't like the idea of kids getting their inheritance at 18 - I think having 5 years of making ends meet on their own would greatly reduce the risk of them blowing everything so I want to delay things past the 'legal' age, though allow some money to assist with college tuition if needed. What entity makes all that possible?


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