Estate Planning in France for U.S. citizens
As financial advisors, we find that most Americans have not adequately considered their estate planning once they become fiscal residents in France. In that case, the laws of France apply and not the laws of the United States. So all of the planning with American trusts will turn out to be for nought as trusts for beneficiaries in France just make it even more complicated and expensive, the opposite of what is intended.
For a basic understanding, one must separate two issues. First, the estate taxes and second, the rules for succession or inheritance. If you are a French fiscal resident, you will pay estate taxes in France based on the French tax rates as outlined in the Franco-American tax treaty of November 24, 1978. The primary exception to this is real estate. Real estate in the U.S. will be taxed in the U.S. Intangible assets, like bank and brokerage assets are taxed in France, even if you have your accounts in the U.S. as France taxes on worldwide assets.
The aspect where planning can be particulary helpful is in the event of death, without planning, France will split your assets between your surviving spouse and your children. This doesn’t have to be the case, as you can designate your surviving spouse as the beneficiary of all of your assets, but you must make this election. Second, the law allows you to choose either France or your country of citizenship for probating your estate. This doesn’t impact the amount of taxes you will pay, but it does allow you to choose the beneficiaries of your estate. I say that with a grain of salt, because if you have children living in Europe, they may be able to overturn your wishes. Of course, this election needs to be made in advance and we always recommend U.S. citizens work with people specialized in U.S. clients. You can expect to pay fees of around €2.500 euros for a basic estate, and higher for an estate involving trusts.